Northern Trust’s third quarter results met analyst expectations for revenue and modestly exceeded profit estimates, but the market reacted negatively, reflecting concerns about underlying business trends. Management attributed the quarter’s performance to disciplined expense control, operational productivity programs, and steady organic growth across core business lines. CEO Michael O’Grady highlighted notable progress in private markets and productivity gains from a new client-centric operating model, while also addressing ongoing headwinds, particularly fee pressure within certain investment products and continued normalization in deposit levels.
Is now the time to buy NTRS? Find out in our full research report (it’s free for active Edge members).
Northern Trust (NTRS) Q3 CY2025 Highlights:
- Revenue: $2.03 billion vs analyst estimates of $2.02 billion (2.9% year-on-year growth, in line)
- Adjusted EPS: $2.29 vs analyst estimates of $2.25 (1.7% beat)
- Adjusted Operating Income: $625 million vs analyst estimates of $618.3 million (30.9% margin, 1.1% beat)
- Operating Margin: 30.6%, in line with the same quarter last year
- Market Capitalization: $24.08 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Northern Trust’s Q3 Earnings Call
- Ebrahim Poonawala (Bank of America) asked about deposit trends and how potential future rate cuts might affect net interest income. CFO David Fox said deposits were largely in line with expectations, and that repricing initiatives and modest rate cut assumptions should help NII remain flat to slightly up in 2026.
- Kenneth Michael Usdin (Autonomous Research) questioned the sustainability of sub-5% expense growth and how management plans to maintain positive operating leverage. Fox reaffirmed the commitment to expense discipline and noted ongoing productivity improvements, especially from AI and organizational changes.
- Brennan Hawken (BMO) probed the decision to allow lower-margin business to roll off and its impact on top-line growth versus profitability. CEO Michael O’Grady emphasized a focus on margin expansion over revenue growth, driven by disciplined client and product selection.
- Betsy Graseck (Morgan Stanley) inquired about the scope and impact of AI initiatives across business units. O’Grady highlighted broad applicability, with efficiency gains in technology, operations, asset management, and wealth advisory, but noted that the financial impact is still developing.
- Gerard Cassidy (RBC) asked about the firm’s approach to managing risk in wealth management during potential market corrections. O’Grady explained that their goals-driven approach ensures clients have appropriate liquidity and asset allocation for long-term stability.
Catalysts in Upcoming Quarters
In upcoming quarters, the StockStory team will be closely watching (1) the pace and impact of AI and automation initiatives on expense growth and productivity, (2) shifts in fee structures and client flows within wealth and asset management, especially in alternatives and ETFs, and (3) continued margin improvements in asset servicing as the company prioritizes higher-profit contracts. Developments in digital asset regulation and interest rate trends will also be important factors.
Northern Trust currently trades at $127.47, in line with $128.52 just before the earnings. At this price, is it a buy or sell? The answer lies in our full research report (it’s free for active Edge members).
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