NII to Aid Northern Trust's Q2 Earnings, High Expenses to Hurt

Northern Trust Corporation NTRS is scheduled to release its second-quarter 2025 results on July 23, before market open. The company’s earnings are expected to rise year over year, though revenue is expected to decline from the prior-year quarter.

In the last reported quarter, the bank recorded a positive earnings surprise, driven by a rise in net interest income (NII) and other fee income. Strong capital ratios were another positive.

Northern Trust has an impressive earnings surprise history. Its earnings beat estimates in the trailing four quarters, with an average positive surprise of 7.40%.

Northern Trust Corporation Price and EPS Surprise

Northern Trust Corporation price-eps-surprise | Northern Trust Corporation Quote

The Zacks Consensus Estimate for NTRS’ second-quarter earnings has been revised upward over the past seven days to $2.08 per share. The figure indicates a 16.9% increase from the year-ago reported number.

The consensus estimate for revenues is pegged at $1.98 billion, indicating a year-over-year decline of 27%

Key Factors & Estimates for NTRS’ Q2 Results

NII & Loans:The Federal Reserve kept interest rates unchanged at 4.25-4.5%, amid tariff-related uncertainty and concerns over its impact on inflation and overall economic conditions in the second quarter. As such, NTRS’ NII is likely to have been positively impacted, as funding/deposit costs stabilized.

The Zacks Consensus Estimate for NII is pegged at $576.5 million in the to-be-reported quarter, indicating a rise of 1.5% on a sequential basis.

In the second quarter, the lending scenario was impressive despite an uncertain macroeconomic backdrop. Per the Fed’s latest data, the demand for overall loans was solid during the quarter.

Thus, NTRS is likely to have witnessed growth in loan demand, which is expected to have supported its average interest-earning asset growth in the quarter under review.

The Zacks Consensus Estimate for average earning assets is pegged at $139.2 billion, indicating a rise by nearly 1% from the prior quarter’s reported figure.

Non-Interest Income: Northern Trust calculates its asset servicing and wealth management servicing fees using a lag effect, relying on prior-quarter end valuations for these computations. Asset servicing fees comprise custody and fund administration, investment management, securities lending, and other fees.

The equity market performance was solid in the second quarter. As such, NTRS is likely to have witnessed growth in custody and fund administration revenues, as well as its investment management fees.

The Zacks Consensus Estimate for custody and fund administration fees is pegged at $464 million, indicating a 2.4% sequential rise.

The Zacks Consensus Estimate for investment management fees is pegged at $156 million, indicating a rise of 2.3% on a sequential basis.

The Zacks Consensus Estimate for total wealth management fees is pegged at $548.2 million, indicating a sequential rise of 1.2%.

For the second quarter of 2025, the Zacks Consensus Estimate for other operating income is pegged at $57.34 million, indicating a rise of 13% on a sequential basis.

The Zacks Consensus Estimate for total fee income is pegged at $1.4 billion, indicating a 2.3% increase from the prior quarter’s reported figure.

Expenses: Northern Trust’s expenses are expected to have been high in the second quarter of 2025, given the rise in compensation and increased investment in equipment and software development.

Asset Quality: NTRS is likely to have set aside a decent amount of money for potential bad loans, given the expectations of higher for longer interest rates and the impact of Trump’s tariffs on inflation.

The Zacks Consensus Estimate for non-performing assets in the second quarter of 2025 is pegged at $74.6 million, indicating a 2.1% rise on a sequential basis.

What the Zacks Model Reveals for NTRS

Our proven model does not predict an earnings beat for Northern Trust this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. This is not the case here, as you can see below.

You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Earnings ESP: The Earnings ESP for NTRS is 0.00%.

Zacks Rank: The company currently sports a Zacks Rank of 1.

Stocks That Warrant a Look

Here are some bank stocks that you may want to consider, as our model shows that these have the right combination of elements to post earnings beat this time around.

The Earnings ESP for Associated Banc-Corp ASB is +0.81% and it carries a Zacks Rank #2 at present. The company is slated to report second-quarter 2025 results on July 24. Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.

Over the past seven days, the Zacks Consensus Estimate for Associated Banc-Corp’s quarterly earnings has been revised upward to 62 cents per share.

The Earnings ESP for KeyCorp KEY is +0.61%, and it currently carries a Zacks Rank #3. The company is slated to report second-quarter 2025 results on July 22.

Over the past seven days, the Zacks Consensus Estimate for KeyCorp’squarterly earnings has been unchanged at 34 cents per share.

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This article originally published on Zacks Investment Research (zacks.com).

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