Northern Trust's Q3 Revenue Up, Net Income Dips on Tax & Credit Swings

Ticker: NTRSO · Form: 10-Q · Filed: Oct 30, 2025 · CIK: 73124

Northern Trust CORP 10-Q Filing Summary
FieldDetail
CompanyNorthern Trust CORP (NTRSO)
Form Type10-Q
Filed DateOct 30, 2025
Risk Levelmedium
Pages16
Reading Time19 min
Key Dollar Amounts$1.66, $68.1 million, $878.4 million, $7.6 million, $6.5 million
Sentimentmixed

Sentiment: mixed

Topics: Asset Servicing, Wealth Management, Net Interest Income, Client Assets, Capital Ratios, Financial Performance, Market Conditions

Related Tickers: NTRS, JPM, MS, GS, BK

TL;DR

**NTRSO's core business is solid with growing client assets, but watch out for one-time gains skewing year-over-year net income comparisons.**

AI Summary

NORTHERN TRUST CORP (NTRSO) reported a mixed financial performance for the period ended September 30, 2025. For the three months, total revenue increased by 3% to $2.025 billion, driven by a 6% rise in Trust, Investment and Other Servicing Fees to $1.265 billion and a 5% increase in Net Interest Income to $590.8 million, primarily due to lower funding costs. However, net income for the quarter decreased by 2% to $457.6 million, largely due to a negative provision for credit losses of $17.0 million compared to an $8.0 million provision in the prior year, and a 19% increase in the provision for income taxes to $161.9 million. For the nine months, total revenue decreased by 6% to $5.963 billion, primarily due to a 60% decline in Other Noninterest Income, which was significantly impacted by a large gain from the Visa Exchange Offer in the prior year. Net income for the nine months fell by 19% to $1.270 billion. Client assets under custody/administration (AUC/A) grew by 9% to $18.247 trillion, and assets under management (AUM) increased by 10% to $1.772 trillion year-over-year, largely due to favorable markets and net new business.

Why It Matters

Northern Trust's ability to grow Trust, Investment and Other Servicing Fees by 6% and Net Interest Income by 5% in Q3 2025, alongside a 9% increase in AUC/A and 10% in AUM, signals strong underlying business momentum in its core asset servicing and wealth management segments. This growth, driven by favorable markets and net new business, is crucial for investors as it indicates sustained demand for its specialized services, especially in a competitive landscape with other large asset managers and custodians. However, the 2% dip in quarterly net income and 19% drop year-to-date, influenced by tax provisions and the absence of prior-year one-time gains, highlights the importance of scrutinizing recurring revenue streams and operational efficiency. Employees benefit from a stable, growing asset base, while customers see continued value in Northern Trust's offerings. The broader market watches these metrics as indicators of health in the institutional and wealth management sectors.

Risk Assessment

Risk Level: medium — The risk level is medium. While Northern Trust's capital ratios remain strong, with Common Equity Tier 1 Capital at 12.4% for the Corporation and 11.8% for The Northern Trust Company, exceeding well-capitalized minimums, the significant year-over-year decline in nine-month net income by 19% to $1.270 billion, largely due to the absence of prior-year one-time gains, indicates potential volatility in reported earnings. Additionally, the negative provision for credit losses of $17.0 million in Q3 2025, while positive for current earnings, could signal a more conservative outlook on credit quality or a release of reserves, which warrants monitoring.

Analyst Insight

Investors should focus on Northern Trust's core fee-based revenue growth and client asset accumulation, which show healthy trends. The decline in net income for the nine months is largely attributable to non-recurring items from the prior year, so investors should adjust their valuation models to reflect normalized earnings potential rather than being overly concerned by the headline net income drop. Consider NTRSO for its stable, fee-generating business model and strong capital position.

Financial Highlights

revenue
$2,025.4M
net Income
$457.6M
eps
$2.29
revenue Growth
+3%

Revenue Breakdown

SegmentRevenueGrowth
Trust, Investment and Other Servicing Fees$1,265.5M+6%
Net Interest Income$590.8M+5%
Other Noninterest Income$169.1M-19%

Key Numbers

Key Players & Entities

FAQ

What were Northern Trust's key revenue drivers in Q3 2025?

Northern Trust's key revenue drivers in Q3 2025 were Trust, Investment and Other Servicing Fees, which increased by $68.9 million (6%) to $1.265 billion, primarily due to favorable markets. Net Interest Income also rose by $28.5 million (5%) to $590.8 million, mainly driven by lower funding costs.

Why did Northern Trust's net income decrease in Q3 2025?

Northern Trust's net income decreased by 2% to $457.6 million in Q3 2025 primarily due to a negative Provision for Credit Losses of $17.0 million compared to an $8.0 million provision in the prior-year quarter, and a 19% increase in the Provision for Income Taxes to $161.9 million.

How did client assets perform for Northern Trust in Q3 2025?

Client assets performed strongly for Northern Trust in Q3 2025. Assets Under Custody/Administration (AUC/A) increased by 9% to $18.247 trillion from December 31, 2024, and Assets Under Management (AUM) grew by 10% to $1.772 trillion over the same period, driven by favorable markets and net new business.

What caused the significant decline in nine-month revenue for Northern Trust?

The significant 6% decline in Northern Trust's nine-month revenue to $5.963 billion was primarily driven by a 60% decrease in Other Noninterest Income. This was largely due to the prior-year period including an $878.4 million net gain from the Visa Exchange Offer and a $68.1 million gain on the sale of an equity investment, which did not recur in 2025.

What is Northern Trust's capital position as of September 30, 2025?

As of September 30, 2025, Northern Trust Corporation maintained a strong capital position with a Common Equity Tier 1 Capital ratio of 12.4% and a Total Capital ratio of 15.1%, both well above the minimum regulatory requirements of 4.5% and 8.0% respectively for a well-capitalized institution.

How did Trust, Investment and Other Servicing Fees break down by segment?

For Q3 2025, Asset Servicing Trust, Investment and Other Servicing Fees totaled $706.9 million, up 6%, with Custody and Fund Administration fees at $482.7 million. Wealth Management Trust, Investment and Other Servicing Fees totaled $558.6 million, up 5%, with the Central region contributing $200.6 million.

What was the impact of market indices on Northern Trust's performance?

Favorable market indices positively impacted Northern Trust's performance. The S&P 500 increased by 16% year-over-year to 6,688 as of September 30, 2025, and the MSCI EAFE (U.S. dollars) rose by 12% to 2,767, contributing to the growth in client assets and related fee income.

What were the changes in Northern Trust's noninterest expense?

Northern Trust's noninterest expense increased by 5% to $1.422 billion in Q3 2025, primarily due to higher Compensation and Equipment and Software expense. For the nine months, noninterest expense remained relatively flat at $4.257 billion.

What is the effective tax rate for Northern Trust in Q3 2025?

The effective tax rate for Northern Trust in Q3 2025 was 26.1%, resulting in a Provision for Income Taxes of $161.9 million. This is an increase from the 22.7% effective tax rate and $136.2 million provision in the prior-year quarter.

What is Northern Trust's strategic outlook based on this filing?

Northern Trust's strategic outlook appears focused on leveraging favorable market conditions and net new business to drive growth in its core Asset Servicing and Wealth Management segments, as evidenced by the increases in AUC/A and AUM. The company continues to manage funding costs and invest in operations, despite the impact of non-recurring prior-year gains on overall net income comparisons.

Risk Factors

Industry Context

Northern Trust operates in the highly competitive financial services industry, focusing on asset servicing and wealth management. Key trends include increasing demand for sophisticated investment solutions, the impact of technology on service delivery, and a dynamic regulatory landscape. The company competes with global banks, specialized asset managers, and trust companies.

Regulatory Implications

The company's operations are subject to stringent regulatory oversight, including capital adequacy requirements (e.g., CET1 ratio of 12.4%). Changes in regulations related to capital, liquidity, or consumer protection could necessitate adjustments in business practices and incur additional compliance costs.

What Investors Should Do

  1. Monitor the trend in Other Noninterest Income
  2. Analyze the drivers of Net Interest Income growth
  3. Evaluate the impact of market conditions on AUC/A and AUM
  4. Assess the change in Provision for Credit Losses

Key Dates

Glossary

Provision for Credit Losses
An amount set aside by a financial institution to cover potential losses from loans or other receivables that may not be repaid. A negative provision indicates a release of previously set-aside funds or an expectation of no losses. (The shift to a negative provision in Q3 2025 is a notable change impacting net income and credit quality outlook.)
Other Noninterest Income
Income generated from sources other than traditional interest income, such as fees from services, trading gains, and investment gains. (This category showed a significant decline due to a prior year's one-time gain, impacting year-over-year comparisons.)
Assets Under Custody/Administration (AUC/A)
The total market value of assets that Northern Trust holds or administers on behalf of its clients. (Represents the scale of the company's core servicing business and a driver of fee income.)
Assets Under Management (AUM)
The total market value of investment assets that Northern Trust manages on behalf of its clients. (Indicates the size of the asset management business and is a key driver of asset management fees.)
Common Equity Tier 1 Capital (CET1)
A measure of a bank's core capital, representing the highest quality of capital, including common stock and retained earnings. (Indicates the bank's financial strength and ability to absorb losses, with a ratio of 12.4% well above regulatory minimums.)

Year-Over-Year Comparison

Compared to the prior year's reporting period, Northern Trust Corporation reported a 3% increase in total revenue for the three months ended September 30, 2025, driven by higher servicing fees and net interest income. However, net income saw a 2% decrease due to a higher provision for income taxes and a shift in the provision for credit losses. For the nine-month period, total revenue declined 6%, primarily due to a significant drop in Other Noninterest Income from a prior year's large gain. Net income for the nine months fell 19%. Key risks remain related to market volatility impacting assets under custody and management, and the ongoing regulatory environment.

Filing Stats: 4,736 words · 19 min read · ~16 pages · Grade level 7 · Accepted 2025-10-30 16:03:29

Key Financial Figures

Filing Documents

– Financial Information

Part I – Financial Information Items 2 and 3: Management's Discussion and Analysis of Financial Condition and Results of Operations and Quantitative and Qualitative Disclosures About Market Risk 3

: Consolidated Financial Statements (unaudited)

Item 1: Consolidated Financial Statements (unaudited) 35 Consolidated Balance Sheets 35 Consolidated Statements of Income 36 Consolidated Statements of Comprehensive Income 36 Consolidated Statements of Changes in Stockholders' Equity 37 Consolidated Statements of Cash Flows 39

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements 40

: Controls and Procedures

Item 4: Controls and Procedures 83

– Other Information

Part II – Other Information

: Legal Proceedings

Item 1: Legal Proceedings 84

: Risk Factors

Item 1A: Risk Factors 84

: Unregistered Sales of Equity Securities and Use of Proceeds

Item 2: Unregistered Sales of Equity Securities and Use of Proceeds 84

: Defaults Upon Senior Securities

Item 3: Defaults Upon Senior Securities 84

: Mine Safety Disclosures

Item 4: Mine Safety Disclosures 84

: Other Information

Item 5: Other Information 85

: Exhibits

Item 6: Exhibits 85

Signatures

Signatures 86 i CONSOLIDATED FINANCIAL HIGHLIGHTS (UNAUDITED) THREE MONTHS ENDED SEPTEMBER 30, NINE MONTHS ENDED SEPTEMBER 30, CONDENSED INCOME STATEMENTS ($ In Millions) 2025 2024 % CHANGE (1) 2025 2024 % CHANGE (1) Noninterest Income $ 1,434.6 $ 1,406.2 2 % $ 4,193.9 $ 4,717.5 (11) % Net Interest Income 590.8 562.3 5 1,769.4 1,613.3 10 Total Revenue 2,025.4 1,968.5 3 5,963.3 6,330.8 (6) Provision for Credit Losses (17.0) 8.0 N/M 0.5 7.5 N/M Noninterest Expense 1,422.9 1,359.4 5 4,257.1 4,258.0 — Income before Income Taxes 619.5 601.1 3 1,705.7 2,065.3 (17) Provision for Income Taxes 161.9 136.2 19 434.8 489.6 (11) Net Income $ 457.6 $ 464.9 (2) % $ 1,270.9 $ 1,575.7 (19) % PER COMMON SHARE Net Income — Basic $ 2.30 $ 2.23 3 % $ 6.34 $ 7.53 (16) % — Diluted 2.29 2.22 3 6.32 7.51 (16) Cash Dividends Declared Per Common Share 0.80 0.75 7 2.30 2.25 2 Book Value — End of Period (EOP) 63.83 59.85 7 63.83 59.85 7 Market Value — EOP 134.60 90.03 50 134.60 90.03 50 SELECTED BALANCE SHEET DATA ($ In Millions) SEPTEMBER 30, 2025 DECEMBER 31, 2024 % CHANGE (1) End of Period: Total Assets $ 170,263.3 $ 155,508.4 9 % Earning Assets 159,079.4 142,228.0 12 Deposits 135,801.1 122,482.7 11 Stockholders' Equity 12,956.0 12,788.4 1 THREE MONTHS ENDED SEPTEMBER 30, NINE MONTHS ENDED SEPTEMBER 30, 2025 2024 % CHANGE (1) 2025 2024 % CHANGE (1) Average Balances: Total Assets $ 151,041.5 $ 146,842.9 3 % $ 153,010.4 $ 146,654.8 4 % Earning Assets 139,338.9 134,767.8 3 141,061.1 134,662.2 5 Deposits 116,700.6 112,560.7 4 118,335.4 112,754.2 5 Stockholders' Equity 12,707.0 12,474.1 2 12,641.4 12,206.5 4 CLIENT ASSETS ($ In Billions) SEPTEMBER 30, 2025 DECEMBER 31, 2024 % CHANGE (1) AUC/A (2) $ 18,247.6 $ 16,788.0 9 % AUC 14,439.1 13,349.2 8 AUM 1,772.7 1,610.4 10 N/M - Not meaningful (1) Percentage calculations are based on actual balances rather than the rounded amounts presented in the table above. (2) For the purposes of disclosing AU

– FINANCIAL INFORMATION

PART I – FINANCIAL INFORMATION Items 2. and 3. Management's Discussion and Analysis of Financial Condition and Results of Operations and Quantitative and Qualitative Disclosures about Market Risk The following is management's discussion and analysis of the financial condition and results of operations (MD&A) of Northern Trust Corporation (Corporation) for the third quarter of 2025. The following should be read in conjunction with the consolidated financial statements and related footnotes included in this report as well as the Annual Report on Form 10-K for the year ended December 31, 2024. Investors also should read the section titled "Forward-Looking Statements." Certain terms used in this report are defined in the Glossary included in our Annual Report on Form 10-K for the year ended December 31, 2024. CONSOLIDATED RESULTS OF OPERATIONS General The Corporation is a leading provider of asset servicing, wealth management, asset management and banking solutions to corporations, institutions, families and individuals. The Corporation focuses on managing and servicing client assets through its two client-focused reporting segments: Asset Servicing and Wealth Management. Asset management and related services are provided to Asset Servicing and Wealth Management clients primarily by the Asset Management business. Except where the context requires otherwise, the terms "Northern Trust," "we," "us," "our," "its," or similar terms mean the Corporation and its subsidiaries on a consolidated basis. Overview of Financial Results TABLE 1: FINANCIAL HIGHLIGHTS THREE MONTHS ENDED SEPTEMBER 30, NINE MONTHS ENDED SEPTEMBER 30, ($ In Millions) 2025 2024 CHANGE 2025 2024 CHANGE Trust, Investment and Other Servicing Fees $ 1,265.5 $ 1,196.6 $ 68.9 6 % $ 3,710.4 $ 3,505.6 $ 204.8 6 % Other Noninterest Income (1) 169.1 209.6 (40.5) (19) 483.5 1,211.9 (728.4) (60) Net Interest Income 590.8 562.3 28.5 5 1,769.4 1,613.3 156.1 10 Total Revenue $ 2,025.4 $ 1,968.5 $ 56.9

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