Northern Trust Q2 Earnings Meet Expectations

Northern Trust (NTRS) reported second-quarter earnings in line with expectations. The company witnessed strong momentum across all segments.

The company reported adjusted earnings of $1.72 per share, meeting the analysts’ expectations. Earnings per share jumped 18% compared to earnings of $1.46 per share in the prior-year period. (See Northern stock charts on TipRanks)

Total revenue grew 5% year-over-year to $1.59 billion. The growth was attributable to new business, as well as beneficial market conditions offsetting the negative impact of low interest rates. Trust, Investment, and Other Servicing Fees grew 12% year-over-year to $1.08 billion.

However, net interest income came in at $343.9 million, down 1% sequentially and 9% year-over-year due to lower net interest margins offsetting higher average earning assets.

Net interest margin was 0.97% in the quarter, down 3 bps sequentially and down 25 basis points from the year-ago period, reflecting lower average interest rates.

Non-interest income grew 10% to $1.24 billion, while total assets under management grew 22% year over year to $1.5 trillion as of June 30, 2021.

NTRS CEO Michael O’Grady commented, “Similar to the prior quarter, we also benefited from an improved outlook in projected economic conditions driving a release of reserves for credit losses. We continued to focus on serving our clients, executing on our long-term priorities, driving operating efficiency and investing wisely for future profitable growth.”

Following the earnings announcement, Credit Suisse analyst Susan Roth Katzke increased the price target on NTRS from $104 to $108 (3% downside potential) while maintaining a Sell rating.

Overall, the stock has a Strong Buy consensus rating based on 2 Buys, 3 Holds, and 1 Sell. The average Northern price target of $119.50 implies 7.3% upside potential from current levels. Shares of NTRS have jumped 50% over the past year.

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