Northern Trust NTRS Q2 2025 Earnings Transcript

Core Insights - Northern Trust Corporation reported a net income of $421 million for Q2 2025, with earnings per share (EPS) of $2.13, reflecting a 20% increase excluding prior-year notables [4][40] - The company raised its return on average common equity (ROE) target to a range of 13%-15% from the previous 10%-15% [5][11] - Total revenue increased by 8% year over year, with favorable currency movements contributing approximately 90 basis points to revenue growth compared to the prior year [5][41] Financial Performance - Net interest income reached a record $615 million, up 7% sequentially and 16% year over year, although $10 million of this was attributed to nonrecurring FX swap activity [8][13] - Total expenses rose by 4.8% year over year, marking the lowest expense growth rate in the past six quarters when excluding notable items [6][52] - The asset servicing pretax margin increased over 10 points to 23.2%, with a 29% increase in pretax profit when excluding prior-year notables [6][47] Shareholder Returns - The company returned $486 million to shareholders, with a payout ratio of 117% and a board-approved 7% increase in the quarterly dividend [7][53] - Average deposits were $122 billion, up 6% sequentially, with interest-bearing deposits increasing by 7% [8][51] Growth Initiatives - The company reported approximately $2.5 billion raised in alternatives in the first half of 2025, with an additional $1 billion in advisory, reflecting a 66% year-over-year increase in alternatives advisory assets under advisement [9][25] - Northern Trust plans to launch 11 new fixed income ETFs in Q3 2025 to meet client demand for scalable exposures [10][31] - The firm is investing in new talent and leadership within Wealth Management to strengthen client coverage and accelerate new business generation [14][29] Strategic Focus - The "One Northern Trust" strategy emphasizes integration and momentum across its business segments, particularly in alternatives [11][20] - The company aims to centralize and automate core operational processes, leveraging AI and public blockchains to enhance client experience and internal productivity [16][22] - Management reaffirmed the company's commitment to independence, stating they have never entertained discussions regarding a sale [12][39]