Northern Trust Corporation’s (NTRS Quick QuoteNTRS - Free Report) second-quarter 2022 results are scheduled to release on Jul 20, before market open. The company’s earnings and revenues are expected to have increased from the year-ago reported figure.

In the last reported quarter, NTRS’s earnings surpassed the Zacks Consensus Estimate.Higher revenues, aided by a rise in fee income and net interest income (“NII”), were driving factors. Most credit metrics marked significant improvements. However, a rising expense base and weak capital ratios were headwinds.

Northern Trust boasts an impressive earnings surprise history. Its earnings surpassed estimates in all of the trailing four quarters, the surprise being 5%, on average.

NTRS’s activities in the to-be-reported quarter were inadequate to raise analysts’ optimism. As a result, the Zacks Consensus Estimate for second-quarter earnings of $1.66 has moved 2.6% downward in the past week. Nonetheless, the figure indicates a 9.9% increase from the year-ago quarter’s reported number. Also, the consensus estimate for revenues is pegged at $1.73 billion, suggesting growth of 9.6% from the year-ago quarter’s reported figure.

Here are other factors that are expected to have impacted NTRS’s quarterly performance:

NII: The lending environment continued in the quarter under review.  Per the Fed’s latest data, commercial real estate loans, consumer loans, and commercial and industrial loans have driven overall loan demand in April and May from the first-quarter end. Also, a strong loan pipeline is expected to have driven organic growth in the wealth management segment in the quarter.

Hence, a higher level of loans will likely aid average interest-earning assets. However, with the pandemic-related liquidity offered by the Fed coming to an end, balance sheet growth — particularly deposits — is likely to have curtailed.

The Zacks Consensus Estimate of $144.6 million for average interest-earning assets for the quarter indicates a 3.4% decline from the last reported figure.

Also, the Federal Reserve raised rates by 125 basis points in total in the quarter. The policy rate, thus, reached 1.5-1.75%, the highest level since just before the March 2020 pandemic. Hence, boosted by higher short-term rates and improvement in the lending scenario, NIM and NII are anticipated to have improved. The Zacks Consensus Estimate for NII is expected to have risen 7.4% to $409 million sequentially.

Fee Income: Northern Trust uses a lag effect to calculate its corporate custody and investment management fees, i.e., computations are based on the prior-quarter end valuations. The performance of equity markets was volatile in the first quarter. Hence a spike in equity trading volumes and higher client activities are likely to have registered gains for NTRS in custody, servicing and management fees in the second quarter.

Also, NTRS provides the majority of its asset-management services through its Asset Servicing unit, which generates a significant portion of total revenues. Due to a decline in U.S. stock prices and global fixed income, asset servicing and asset management fees are likely to have faced headwinds.

Nonetheless, the wealth management unit is likely to have continued to recover from the pandemic-led slowdown. This is anticipated to have supported fee income for the second quarter.

Also, the recapture of money market fee waivers is expected to have taken place in the second quarter.

The Zacks Consensus Estimate for security commissions and trading income, pegged at $35.6 million, reflects a 1.8% decline sequentially.

The Zacks Consensus Estimate for total fee income is pegged at $1.31 billion, indicating a 1.5% fall from the prior quarter’s reported figure.

Expenses: NTRS’s investments in digital initiatives and technology are likely to have kept costs elevated in the quarter. These investments might aid the company over the long term, but the rising current expense level is anticipated to have curbed the bottom-line expansion in the second quarter. Costs are likely to have increased due to inflation and increased hiring. The company expects higher wages and hiring to increase second-quarter 2022 expenses by $5-$10 million.

What Does the Zacks Model Say?

The proven Zacks model does not conclusively predict an earnings beat for Northern Trust this time around. This is because NTRS does not have the right combination of the two key ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or higher — for increasing the odds of an earnings beat.

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

Earnings ESP: Northern Trust has an Earnings ESP of 0.00%.

Zacks Rank: Northern Trust currently carries a Zacks Rank of 5 (Strong Buy).

Bank Stocks Worth a Look

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

The Earnings ESP for Truist Financial (TFC Quick QuoteTFC - Free Report) is +0.53% and it carries a Zacks Rank #3 at present. The company is slated to report second-quarter 2022 results on Jul 19.

Over the past week, TFC’s Zacks Consensus Estimate for quarterly earnings has been revised marginally downward.

Citizens Financial Group (CFG Quick QuoteCFG - Free Report) is scheduled to release second-quarter 2022 earnings on Jul 19. The company, which carries a Zacks Rank #3 at present, has an Earnings ESP of +4.98%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

CFG’s quarterly earnings estimates have moved marginally downward over the past week.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.