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    NTRS
    Earnings call· Mar 2026(Q1 FY26)

    NORTHERN TRUST Q1 FY26 earnings call NTRS

    Apr 21, 2026 Source

    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

    5

    • 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

    3

    • 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

    9
    CategoryTargetConfidence
    Full year NII growth
    mid- to high single digits over the prior year
    high materiality
    High
    Full year positive operating leverage
    more than 100 basis points
    high materiality
    High
    Full year earnings payout ratio
    at least 100%
    medium materiality
    High
    Effective tax rate
    approximately 26% to 26.5%
    medium materiality
    High
    Increase revenue-generating roles (Wealth Management)
    high single-digit percentages
    medium materiality
    Medium
    Increase opportunities from Centers of Influence
    10%
    low materiality
    Medium
    Increase alts fundraising
    25%
    medium materiality
    Medium
    Organic growth rate
    around 3%
    high materiality
    Medium
    Average deposits
    keep $4 to $5 billion
    medium materiality
    Medium

    Segment performance

    3
    SegmentRevenueYoYQoQMargin
    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 million11%—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 million10%—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
    		————

    Operational metrics

    37
    Pretax margin
    32%up nearly 500 basis points YoY
    Q1 FY26

    Driven by over 700 basis points of positive operating leverage.

    Return on average common equity
    17.4%
    Q1 FY26

    Reached the higher end of the new medium-term target range.

    Expense to trust fee ratio
    112.4%down 440 basis points YoY
    Q1 FY26

    Seasonally higher, but improved year-over-year.

    Total operating leverage
    700 basis points
    Q1 FY26

    Generated more than 700 basis points of positive operating leverage.

    Trust fee operating leverage
    410 basis points
    Q1 FY26

    Generated from trust fees.

    Effective tax rate
    25%down 150 basis points QoQ
    Q1 FY26

    Expected to be 26% to 26.5% for the full year 2026.

    Reserve release
    $3 million
    Q1 FY26

    Credit quality remains very strong.

    Unrealized after-tax loss on available-for-sale securities
    $446 million
    Q1 FY26

    At quarter end.

    Common Equity Tier 1 (CET1) ratio (standardized approach)
    12%decreased 60 basis points QoQ
    Q1 FY26

    Remains well above required regulatory minimums.

    Tier 1 leverage ratio
    7.3%down 50 basis points QoQ
    Q1 FY26

    Remains strong.

    Total capital returned to shareholders
    $510 million
    Q1 FY26

    Representing a 100% payout ratio.

    Share repurchases
    $359 million
    Q1 FY26

    Part of total capital returned to shareholders.

    Net interest margin (FTE basis)
    1.75%decreased sequentially
    Q1 FY26

    NII was up 1% sequentially to $662 million.

    Securities portfolio fixed percentage
    52%flat QoQ
    Q1 FY26

    Part of investment strategy.

    Duration of securities portfolio
    1.44dipped slightly QoQ
    Q1 FY26

    At the end of the quarter.

    Duration of total balance sheet
    under 1 year
    Q1 FY26

    Maintained short duration.

    Average deposits
    $129 billionup 8% QoQ, up 11% YoY
    Q1 FY26

    Higher than expected due to elevated volatility and general uncertainty.

    Noninterest-bearing deposits
    15%increased 5% QoQ
    Q1 FY26

    Maintained a significant portion of the deposit mix.

    Visa shares proceeds (pretax)
    $470 million
    null

    Roughly half of the company's position will become available.

    Visa shares proceeds (post-tax)
    $350 million
    null

    Depending on share price.

    Fed balance sheet shrinkage
    $2.5 trillion
    null

    The Fed balance sheet has already been reduced by this amount, impacting market liquidity.

    Total revenue growth
    14%YoY
    Q1 FY26

    Driven by trust fees and net interest income.

    Trust fees growth
    11%YoY
    Q1 FY26

    Driven by favorable markets, currency, and new business generation.

    Net interest income growth
    15%YoY
    Q1 FY26

    Reached a new quarterly record of $662 million.

    Other noninterest income growth
    33%YoY
    Q1 FY26

    Contributed to overall revenue growth.

    Organic growth streak
    7 consecutive quarters
    Q1 FY26

    Reflects consistent positive organic growth.

    Digital channels opportunities growth (Wealth Management)
    nearly 50%YoY
    Q1 FY26

    Indicates increasing effectiveness of digital client acquisition initiatives.

    GFO organic growth rate
    above average
    Q1 FY26

    Global Family Office business continues to be a strong growth driver.

    International GFO client base/revenue
    less than 15%growing at a faster growth rate
    Q1 FY26

    Represents a scalable global opportunity for the GFO business.

    Liquidity AUM
    $350 billion
    Q1 FY26

    Associated with 13 consecutive quarters of positive flows.

    ETF positive flows streak
    4 consecutive quarters
    Q1 FY26

    Reflects strong momentum in equities.

    Funds in market (alternatives)
    7up from 5 QoQ
    Q1 FY26

    Part of expanding alternative investment offerings.

    Healthcare systems served (top 50 US)
    3/4
    Q1 FY26

    Result of securing 9 new mandates in Asset Servicing.

    Alternative AUA
    approaching $1 trillion
    Q1 FY26

    Northern Trust remains a market leader in alternatives.

    New mandates (Asset Servicing)
    9
    Q1 FY26

    Includes 4 not-for-profit health care systems.

    New client onboardings (digital assets)
    5
    Q1 FY26

    Reflects continued interest in digital asset strategy.

    Barron's Top Fund Family ranking
    4th overall, 5th in general equity
    2025

    NTAM recognized out of 100+ families, reflecting strength of active investment platform.

    Industry KPIs

    2
    MetricValueDetails
    AUM$350 billionUSD
    Fundraising inflows13 consecutive quarters

    Product announcements

    4
    ProductTypeDetails
    One Wealth assistantlaunch
    Tokenized share class for NIF treasury instruments portfoliolaunch
    Northern Trust U.S. equity ETFlaunch
    Saudi Arabia equity index strategylaunch

    Deals & partnerships

    5
    UnnamedCustomer 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.

    UnnamedCustomer 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.

    UnnamedProduct expansion

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

    UnnamedCustomer 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.

    UnnamedThird-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

    4
    Wealth Management pretax margin pressureQ1 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 depositsQ2 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 talentOngoing

    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 depositsOngoing

    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

    7

    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 read7 chapters

    Detailed Narrative

    01

    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.

    02

    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.

    03

    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.

    04

    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.

    05

    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.

    06

    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.

    07

    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.

    AI-generated summary of the company’s earnings call. Not investment advice.