NTRS Q3 Earnings Beat on Higher NII & AUM Growth Despite Rising Costs

Northern Trust Corporation’s NTRS third-quarter 2025 earnings per share (EPS) of $2.29 beat the Zacks Consensus Estimate of $2.26. In the prior-year quarter, the company reported an EPS of $2.22.

NTRS results benefited from a rise in net interest income (NII). Also, an increase in total assets under custody (AUC) and assets under management (AUM) balances supported the financials. However, elevated expenses and reduced other fee income were concerning.

Net income (GAAP basis) was $457.6 million, down 1.6% from the prior-year quarter.

NTRS’ Revenues & Expenses Rise

Quarterly total revenues (GAAP basis) of $2.02 billion increased 2.8% year over year. However, the top line missed the Zacks Consensus Estimate by nearly 1%.

NII on a fully taxable equivalent basis was $596.3 million in the quarter under review, up 4.7% year over year. The net interest margin was 1.70%, up 2 basis points from the prior-year quarter.

Trust, investment and other servicing fees totaled $1.26 billion, up 5.7% year over year.

Other non-interest income decreased 19.3% to $169.1 million from the year-ago quarter. The decline was driven by a decrease in other operating income.

Non-interest expenses rose 4.7% year over year to $1.42 billion in the reported quarter. The rise primarily stemmed from an elevation in all components except for outside services and other operating expenses.

Northern Trust’s AUC & AUM Rise

As of Sept. 30, 2025, Northern Trust’s total AUC increased 4.7% year over year to $14.4 trillion. Also, total AUM rose 9.3% year over year to $1.8 trillion.

NTRS’ Credit Quality: Mixed Bag

Total allowance for credit losses was $206.7 million, down 6% year over year.

Total non-accrual assets increased to $78.8 million as of Sept. 30, 2025, from $73.1 million in the year-ago period. NTRS reported provision benefits of $17 million in the third quarter compared with a provision for credit losses of $8 million in the year-ago quarter.

Northern Trust’s Capital & Profitability Ratios Decline

Under the Standardized Approach, as of Sept. 30, 2025, the Common Equity Tier 1 capital ratio was 12.4%, down from 12.6% in the prior-year quarter. The total capital ratio was 15.1%, down from 15.6% in the year-ago quarter. The Tier 1 leverage ratio was 8.0%, down from 8.1% in the prior-year quarter.

The return on average common equity was 14.8% compared with the year-earlier quarter’s 15.4%.

NTRS’ Capital Distribution Activities

In the reported quarter, Northern Trust returned $431.3 million to shareholders through share repurchases and dividends.

Our View on Northern Trust

A rise in NII drove the company’s third-quarter performance. Its increasing AUC and AUM balances are likely to support financials. However, a decline in fee income and a rise in expenses will likely impede growth.

Northern Trust Corporation Price, Consensus and EPS Surprise

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

Currently, Northern Trust carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Banks

Comerica Incorporated CMA has reported third-quarter 2025 earnings per share of $1.35, beating the Zacks Consensus Estimate of $1.28. In the prior-year quarter, the company reported an EPS of $1.37.

CMA’s results have benefited from a rise in NII and deposit balance.  Yet, lower loan balances, a decline in non-interest income, a rise in expenses, and weak asset quality were concerning.

Fifth Third Bancorp FITB reported third-quarter 2025 adjusted earnings per share of 93 cents, surpassing the Zacks Consensus Estimate of 87 cents. In the prior-year quarter, the company posted an EPS of 85 cents.

FITB’s results have benefited from a rise in net interest income, fee income and loan balances. However, higher expenses and weak asset quality were headwinds.

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

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