Northern Trust(US:NTRS)2021-07-21 20:10Financial Data and Key Metrics Changes - The company reported second quarter net income of $368.1 million, with earnings per share at $1.72 and a return on common equity of 13.7% [12] - Year-over-year revenue increased by 5%, with noninterest income up 10% and net interest income down 9% [13] - Expenses rose by 8%, while net income increased by 18% [13] - Assets under custody and administration grew to $15.7 trillion, up 30% year-over-year [13] Business Line Data and Key Metrics Changes - In Wealth Management, trust investment and other servicing fees were $464 million, up 17% year-over-year [17] - Asset Management saw strong growth in liquidity products and FlexShares ETFs, with assets under management reaching $1.5 trillion, up 22% year-over-year [8][13] - Corporate & Institutional Services (C&IS) fees totaled $612 million, up 8% year-over-year, with custody and fund administration fees at $455 million, up 21% year-over-year [15] Market Data and Key Metrics Changes - The company experienced a favorable market environment, contributing to a 12% year-over-year growth in trust fees despite headwinds from money market fee waivers [9] - Average one month and three month LIBOR rates were stable during the quarter, with modest declines noted [12] Company Strategy and Development Direction - The company is focused on executing growth strategies across its businesses, including expanding sustainable investment solutions and enhancing digital capabilities [6][8] - The launch of the Tax Policy Resource Center aims to generate new business opportunities [7] - The company continues to invest in technology and staff to build a diverse workforce for future growth [9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating the low interest rate environment while focusing on efficiency and organic growth [10] - The company is operating in "resiliency mode" due to the public health environment, with plans for staff to return to offices [10] - Management highlighted the importance of a strong capital base and liquidity profile to support client needs [22] Other Important Information - The company repurchased 252,000 shares of common stock at a cost of $30 million and declared cash dividends of $0.70 per share totaling $148 million [22] - The corporate social responsibility report was published, marking a decade of transparent reporting [9] Q&A Session Summary Question: Can you unpack some of the trends on expenses? - Management noted that compensation expenses were controlled, with a focus on reinvesting savings into technology [25][26] Question: How does the company view share repurchases in the current environment? - Management indicated that share repurchases are tied to various factors, including dividends and capital required for RWA growth [29][30] Question: What is the outlook on net interest income and fee waivers? - Management expects fee waivers to decline sequentially, with recent Fed actions positively impacting the run rate [39] Question: Can you provide context on loan growth? - Loan growth was driven by proactive client engagement and episodic large client borrowing needs [42] Question: How is the company positioned for the OCIO market? - Management expressed confidence in their OCIO business, highlighting strong expertise and client relationships [59][60]