Northern Trust(US:NTRS)2022-04-27 02:45Financial Data and Key Metrics Changes - The company reported a first quarter net income of $389.3 million, with earnings per share at $1.77 and a return on average common equity of 14.2% [17] - Year-over-year revenue increased by 9%, while expenses rose by 8%, resulting in a 4% increase in net income [18] - The provision for credit losses was $2 million for the quarter, with a return on average common equity up from 13.7% a year ago [18] Business Line Data and Key Metrics Changes - In the Wealth Management business, trust, investment, and other servicing fees totaled $506 million, up 14% year-over-year and 4% sequentially [24] - The Asset Servicing business generated fees of $662 million, reflecting a 7% year-over-year increase and a 6% sequential increase [21] - Assets under custody and administration for asset servicing clients reached $14.5 trillion, up 5% year-over-year but down 4% sequentially [22] Market Data and Key Metrics Changes - The company experienced strong organic growth in its FlexShares' ETFs, surpassing $22 billion in assets, up 13% for the quarter [12] - The Global Family Office business saw significant engagement and new business, contributing to the overall growth in Wealth Management [10] Company Strategy and Development Direction - The company is focused on enhancing foundational strength through advancements in data and digital efforts while executing growth strategies across all business lines [9] - The integration of the Corporate & Institutional Services team with the Global Services operational team aims to improve client service and operational efficiency [13][92] Management's Comments on Operating Environment and Future Outlook - Management expressed concerns about the ongoing geopolitical crisis in Ukraine and its impact on market volatility and inflation [7][8] - The company anticipates that negative market conditions in the first quarter will have a more significant impact in the second quarter [33] Other Important Information - The company declared cash dividends of $0.70 per share, totaling $147.8 million to common stockholders [32] - The capital ratios remained strong, with a Common Equity Tier ratio of 11.4% [32] Q&A Session Summary Question: Outlook on 2022 expenses - Management discussed the increase in compensation expenses due to retirement-eligible equity incentives and projected hiring adjustments, indicating a potential $20 million increase in annual base pay adjustments [37][39] Question: Buybacks and AOCI impact - Management confirmed that they are monitoring AOCI impacts closely and will be prudent regarding buybacks in light of capital ratios [40][41] Question: Balance sheet and deposit mix - Management noted that they have not seen significant movement in operational deposits but anticipate potential shifts due to rising interest rates [46][48] Question: NII trajectory and deposit betas - Management provided insights on the expected impact of interest rate hikes on net interest income and deposit betas, emphasizing the importance of maintaining client relationships [54][110] Question: Asset Servicing and Wealth Management organic growth - Management indicated positive new business in Asset Servicing and strong performance in the Global Family Office segment, with expectations for continued growth [99][101]