Inquire about the win rate, competitive landscape, and growth runway for the GFO business, especially regarding international scalability and expanding client relationships beyond initial offerings.

GFO is a strong business leveraging all three firm segments, growing at a high rate due to competitive positioning and scalable international opportunities (currently <15% international but growing faster). Relationships often start with custody/reporting, then expand to investment management and other services. “The global family office business is absolutely one of our strongest businesses. It's an area where truly we can deliver the entire firm.”

Given the 740 bps operating leverage in Q1, how should investors think about expense growth for the rest of the year, especially with the reiterated "over 100 bps" full-year guide? Are there deferred investments?

Expense growth in Q1 was mainly driven by incentives. The company maintains its "productivity funding investment" methodology, hitting Q1 targets for productivity and investments. The full-year operating leverage guide reflects flexibility to react to market conditions. Dave Fox added that the direction of travel for expenses is "down for the remainder of the year." “The direction of travel on expenses is down for the remainder of the year.”

NTRS

Northern Trust (NTRS) Q1 FY26 earnings call: guidance and Q&A

Q: How much of the strong Q1 ROE and pretax margin is due to favorable macro conditions versus structural self-help initiatives, and how sustainable is it?

Mike O'Grady stated that the strong Q1 performance benefited from a constructive market (high equity levels, volatility, liquidity). However, the company's "One Northern Trust" strategy aims for consistent high performance across environments, with a focus on execution regardless of market conditions. The medium-term targets are still being pursued. “Our goal is to be a consistently high-performing company. And as you pointed out, that's something we put out there a few years ago, along with our One Northern Trust strategy.”

Q: Given the 740 bps operating leverage in Q1, how should investors think about expense growth for the rest of the year, especially with the reiterated "over 100 bps" full-year guide? Are there deferred investments?

Expense growth in Q1 was mainly driven by incentives. The company maintains its "productivity funding investment" methodology, hitting Q1 targets for productivity and investments. The full-year operating leverage guide reflects flexibility to react to market conditions. Dave Fox added that the direction of travel for expenses is "down for the remainder of the year." “The direction of travel on expenses is down for the remainder of the year.”

Q: Why is Northern Trust increasing wealth producers by high single-digits now, given the competitive market, and what is the company's unique pitch to attract top talent?

The company is focused on hiring revenue-generating talent because producer growth has lagged business growth. Northern Trust offers a differentiated value proposition: a strong brand, focus on the upper market tiers, an investing platform, and unique offerings like Family Office Solutions, which combine resources and banking capabilities with fiduciary expertise. “We think for an adviser or a professional that's looking to be able to apply their trade, if you will, and succeed, we offer the best platform for them to be able to do that.”

Earnings call· Mar 2026 (Q1 FY26)· Financials· Apr 21, 2026

Source: earnings call transcript

Executive summary

Northern Trust Corporation Q1 FY26 — Strong Revenue Growth and Operating Leverage

Northern Trust delivered a strong first quarter, capitalizing on a constructive market and rate environment with significant revenue growth and operating leverage. The company is accelerating AI deployment to enhance client experience, improve decision quality, and increase operating leverage, while also investing in talent and distribution capabilities across its businesses to drive sustained organic growth.

Highlights

Total revenue increased 14% year-over-year, driven by 11% growth in trust fees and 15% growth in net interest income.
Generated over 700 basis points of positive operating leverage, leading to a pretax margin of 32%.
Return on average common equity reached 17.4%, at the higher end of the medium-term target range.
Returned $510 million to shareholders, representing a 100% payout ratio, including $359 million in share repurchases.
Asset Servicing pretax profit grew 59% year-over-year, with pretax margin expanding 740 basis points to 28.3%.

Concerns

Wealth Management pretax margin remained flat at 37.1% year-over-year due to continued reinvestment in the business.
Assets under custody/administration and assets under management were both down 1% sequentially.
Net interest margin decreased sequentially to 1.75% due to large short-term institutional deposits and the absence of a higher FTE adjustment.

Guidance & targets

Category	Target	Timeline	Confidence
Full year NII growth	mid- to high single digits over the prior year high materiality	FY26 · 2026	High
Full year positive operating leverage	more than 100 basis points high materiality	FY26 · 2026	High
Full year earnings payout ratio	at least 100% medium materiality	FY26 · 2026	High
Effective tax rate	approximately 26% to 26.5% medium materiality	FY26 · 2026	High
Increase revenue-generating roles (Wealth Management)	high single-digit percentages medium materiality	year-end · 2026	Medium
Increase opportunities from Centers of Influence	10% low materiality	2026	Medium
Increase alts fundraising	25% medium materiality	this year · 2026	Medium
Organic growth rate	around 3% high materiality	medium-term	Medium
Average deposits	keep $4 to $5 billion medium materiality	Q2 · 2026	Medium

Segment performance

Segment	Revenue	YoY	QoQ	Margin
Wealth Management Strong performance across GFO and regions, with robust organic growth in GFO. Margin remained flat due to reinvestment in the business. Assets under management: $498 billionAssets under management growth YoY: 11%Average deposits: Flat sequentiallyAverage loans growth QoQ: 1%Pretax profit growth YoY: 9%	$601 million	11%	—	37.1%
Asset Servicing Boosted by healthy new business generation and robust capital markets activity. Margin expanded significantly due to elevated deposits, volatility-driven capital markets, and a pivot in new business approach. Assets under custody and administration: $17.3 trillionAssets under custody and administration growth YoY: 9%Custody and fund administration fees: $498 millionCustody and fund administration fees growth YoY: 10%Assets under management: $1.3 trillionAssets under management growth YoY: 11%Investment management fees: $169 millionInvestment management fees growth YoY: 11%Average deposits growth QoQ: 11%Average loan volume decrease QoQ: 2%Pretax profit growth YoY: 59%Capital markets activity growth: 34%	$741 million	10%	—	28.3%
Asset Management (NTAM) Good progress with strength across liquidity, alternatives, and equities. Extended streak of positive flows in liquidity. Launched tokenized share class and new equity strategies. Recognized as a top fund family by Barron's. Liquidity AUM: $350 billionLiquidity positive flows streak: 13 consecutive quartersSaudi Arabia equity index strategy client capital: $1 billion	—	—	—	—

NTRS operating KPIs by quarter

NTRS operating KPIs stated on its earnings calls, by fiscal quarter
KPI	Mar 2025 Q1 FY25	Dec 2025 Q4 FY25	This call Mar 2026 Q1 FY26	Jun 2026 Q2 FY26	Change vs prior quarter
Assets under management (AUM) Wealth Management	$447B Assets under management for our Wealth Management clients were $447 billion at quarter end, up 6% year-over-year. Source: earnings call transcript	$507B Assets under management for our Wealth Management clients were $507 billion at quarter end, up 13% year-over-year. Source: earnings call transcript	$498B Assets under management for our wealth management clients were $498 billion at quarter end, down 2% sequentially but up 11% year-over-year. Source: earnings call transcript	$534B Assets under management for our Wealth Management clients were $534 billion at quarter end, up 7% sequentially and 14% year-over-year. Source: earnings call transcript	+7.2%
Common equity tier 1 ratio (CET1)	12.9% Our common equity Tier 1 ratio under the standardized approach increased by 50 basis points on a linked-quarter basis to 12.9%, driven by capital accretion and a decline in RWA. Source: earnings call transcript	12.6% Our common equity Tier 1 ratio under the standardized approach increased by 20 basis points on a linked-quarter basis to 12.6% driven by capital accretion and a decrease in RWA. Source: earnings call transcript	12% Our common equity Tier 1 ratio on the standardized approach decreased by 60 basis points on a linked-quarter basis to 12% driven by an increase in RWA related to elevated capital markets activities. Source: earnings call transcript	12.2% Our common equity Tier 1 ratio under the standardized approach was 12.2%, up 20 basis points from the prior quarter. Source: earnings call transcript	+0.2 pt

Operating figures the company stated on at least two of the calls shown, checked against each call's transcript. Click a figure to read the sentence. A dash means it was not stated that quarter.

Product announcements

Product	Type	Timeline
One Wealth assistant	launch	—
Tokenized share class for NIF treasury instruments portfolio	launch	Q1 FY26
Northern Trust U.S. equity ETF	launch	Q1 FY26
Saudi Arabia equity index strategy	launch	Q1 FY26

Deals & partnerships

Unnamed Customer contract

Secured 9 new mandates across foundations, endowments and health care institutions, including 4 not-for-profit health care systems, bringing total served top 50 US healthcare systems to 3/4.

Unnamed Customer contract

Over a dozen wins in alternatives, including a planned second quarter launch of a new private equity fund focusing on energy infrastructure in Europe, further expanding global relationship across Europe, Australia and the U.S.

Unnamed Product expansion

Announced an expansion of CLO middle office services, delivering a unified operational and compliance framework that supports the full lifecycle of CLOs.

Unnamed Customer contract

Onboarded 5 new clients, providing custody and other services for tokenized real-world assets, U.S. stable coins European money market funds and carbon credits.

Unnamed Third-party distribution partnership

Institutional quality direct indexing capabilities became available on a platform, the largest independent TAMP which supports approximately 1/3 of all financial advisers in the U.S., enabling advisers to access diverse equity strategies.

Risks & headwinds

Wealth Management pretax margin pressure Q1 FY26

Pretax margin remained flat at 37.1% YoY

Mitigation:Continued reinvestment in the business to support future growth, with expectation that improvements in Asset Servicing will offset any near-term pressure.

Deposit volatility and short-term nature of large institutional deposits Q2 FY26

Average deposits up $9 billion QoQ, but only $4-5 billion expected to be retained in Q2

Mitigation:Company keeps its balance sheet open for largest clients to accommodate strategic repositioning, but acknowledges these are not core operational deposits.

Competitive market for wealth management talent Ongoing

Described as 'most competitive market we've seen in the Wealth business like almost ever'

Mitigation:Focus on hiring revenue-generating roles by high single-digit percentages, leveraging a differentiated value proposition, strong brand, and unique offerings like Family Office Solutions.

Potential impact of Fed balance sheet shrinkage on market liquidity and deposits Ongoing

Fed balance sheet already down $2.5 trillion

Mitigation:Observing liquidity levels; acknowledges some exposure on the downside if Fed further shrinks balance sheet, but less on the upside.

Q&A highlights

How much of the strong Q1 ROE and pretax margin is due to favorable macro conditions versus structural self-help initiatives, and how sustainable is it?

Mike O'Grady stated that the strong Q1 performance benefited from a constructive market (high equity levels, volatility, liquidity). However, the company's "One Northern Trust" strategy aims for consistent high performance across environments, with a focus on execution regardless of market conditions. The medium-term targets are still being pursued.

“Our goal is to be a consistently high-performing company. And as you pointed out, that's something we put out there a few years ago, along with our One Northern Trust strategy.”

asked by Ebrahim Poonawala · answered by Michael O'grady

2 min read 7 chapters

Detailed narrative

AI Strategy and Deployment

Northern Trust is accelerating AI deployment across three outcomes: Hyperpersonalization, AI-generated alpha, and infinite scalability. Hyperpersonalization is exemplified by the One Wealth assistant, integrating insights into workflows for client-specific context. AI-generated alpha strengthens investment outcomes through faster data synthesis and scenario testing in Asset Management. Infinite scalability aims to disconnect growth from staffing, driving operating leverage and consistent execution.

Wealth Management Growth Initiatives

The company is focused on increasing revenue-generating roles by high single-digit percentages by year-end, including critical producer roles. A more robust outreach framework for Centers of Influence (COIs) has been introduced, targeting a 10% increase in opportunities in 2026, supported by a new senior leader hire.

Digital channels are also being enhanced for data integration, lead qualification, and personalization, leading to a nearly 50% year-over-year growth in digital opportunities in Q1.

Alternative Investments Expansion

Northern Trust is actively expanding its alternative investment offerings, with 7 funds in the market in Q1, up from 5 in the prior quarter. The goal is to increase alts fundraising by 25% in 2026, with plans for new alternative investment funds and strategies in venture capital, co-investments, and secondary funds. This aims to broaden client access to diversified returns while maintaining disciplined portfolio construction.

Asset Servicing Mandate Wins

The Asset Servicing business secured 9 new mandates in Q1 across foundations, endowments, and healthcare institutions, including 4 not-for-profit healthcare systems. This brings the total to serving three-quarters of the top 50 healthcare systems in the U.S. Demand for scalable institutional-grade services remains strong, with over a dozen wins in alternatives, including a new private equity fund focusing on energy infrastructure in Europe.

Digital Asset Strategy

Northern Trust is seeing continued interest in its digital asset strategy, particularly in custody, reporting, and servicing of tokenized assets. In Q1, 5 new clients were onboarded for custody and services related to tokenized real-world assets, U.S. stablecoins, European money market funds, and carbon credits.

The company also launched a tokenized share class for its NIF treasury instruments portfolio, marking its entry into the digital asset marketplace for institutional-grade liquidity strategies.

Balance Sheet and Liquidity Management

Average deposits were higher than expected at $129 billion, up 8% sequentially and 11% year-over-year, driven by elevated volatility and market uncertainty, including large short-term institutional deposits. The company maintains its balance sheet open for large clients, accommodating strategic repositioning.

While some of these large deposits are temporary, Northern Trust expects to retain $4-5 billion of the recent $9 billion increase in average deposits for Q2. The duration of the securities portfolio dipped slightly to $1.44, with total balance sheet duration under 1 year.

Basel III Endgame Impact

Management's preliminary view on the new Basel III Endgame proposal suggests it could be a net positive for the company, particularly regarding commercial loans and operational risk, which are expected to lead to a positive impact on Risk-Weighted Assets (RWA). However, it's still early in the comment period, and the full impact is being cautiously assessed.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.