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Northern Trust Corporation’s (NTRS - Free Report) third-quarter 2022 results are scheduled to release on Oct 19, 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 missed the Zacks Consensus Estimate.A rising expense base and weak capital ratios were headwinds. Nonetheless, higher revenues, aided by a rise in trust, investment and other servicing fees, and net interest income (“NII”), were the driving factors.
Northern Trust has a decent earnings surprise history. Its earnings surpassed estimates in three of the trailing four quarters and missed in the other, the surprise being 4.31%, 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 third-quarter earnings of $1.82 has moved marginally downward in the past month. Nonetheless, the figure indicates a 1.1% increase from the year-ago quarter’s reported number. Also, the consensus estimate for revenues is pegged at $1.77 billion, suggesting growth of 8.2% 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 to improve in the quarter under review, albeit at a slower pace. Per the Fed’s latest data, commercial and industrial loans, real estate loans, and consumer loans slightly moderated in July and August from the second quarter. Encouragingly, commercial real estate loan growth accelerated in the quarter under review.
Hence, a higher level of loans will likely aid average interest-earning assets. However, lower levels of client deposits and securities are expected to have shrunk the average balance sheet.
The Zacks Consensus Estimate of $133.5 million for average interest-earning assets for the quarter indicates a 4.5% decline from the last reported figure.
Also, the Federal Reserve raised rates by 150 basis points in total in the quarter. The policy rate, thus, reached 3.0-3.25%, the highest level since 2008. 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 2.8% to $472 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 second 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 third 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, global fixed-income markets and assets under management in the prior quarter, asset servicing and asset management fees are likely to have faced headwinds.
Investment management fees are expected to increase primarily due to the recapture of money market fee waivers, supported by higher Fed fund rates, partially offset by unfavorable markets.
The Zacks Consensus Estimate for total fee income is pegged at $1.25 billion, indicating a 4.6% fall from the prior quarter’s reported figure.
Expenses: NTRS’s investments in automation and wallet share deepening in the asset servicing and wealth management businesses 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 third quarter. Costs are likely to have increased due to inflation and increased hiring.
What Does the Zacks Model Say?
The proven Zacks model predicts that an earnings beat is likely for Northern Trust this time around. This is because NTRS has 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 are reported with our Earnings ESP Filter.
Earnings ESP: Northern Trust has an Earnings ESP of +0.19%.
BankUnited (BKU - Free Report) and Associated Banc-Corp (ASB - Free Report) are a few other stocks that you might want to consider, as these, too, have the right combination of elements to post an earnings beat in their upcoming releases, per our model.
The Earnings ESP for BKU is +1.32% and the company carries a Zacks Rank #3 at present. BKU is slated to report third-quarter 2022 results on Oct 20.
Associated Banc-Corp is scheduled to release third-quarter 2022 earnings on Oct 20. ASB, with a Zacks Rank #2 (Buy) at present, has an Earnings ESP of +2.39%.
Image: Bigstock
Key Factors Affecting Northern Trust's (NTRS) Q3 Earnings
Northern Trust Corporation’s (NTRS - Free Report) third-quarter 2022 results are scheduled to release on Oct 19, 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 missed the Zacks Consensus Estimate.A rising expense base and weak capital ratios were headwinds. Nonetheless, higher revenues, aided by a rise in trust, investment and other servicing fees, and net interest income (“NII”), were the driving factors.
Northern Trust has a decent earnings surprise history. Its earnings surpassed estimates in three of the trailing four quarters and missed in the other, the surprise being 4.31%, on average.
Northern Trust Corporation Price and EPS Surprise
Northern Trust Corporation price-eps-surprise | Northern Trust Corporation Quote
NTRS’s activities in the to-be-reported quarter were inadequate to raise analysts’ optimism. As a result, the Zacks Consensus Estimate for third-quarter earnings of $1.82 has moved marginally downward in the past month. Nonetheless, the figure indicates a 1.1% increase from the year-ago quarter’s reported number. Also, the consensus estimate for revenues is pegged at $1.77 billion, suggesting growth of 8.2% 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 to improve in the quarter under review, albeit at a slower pace. Per the Fed’s latest data, commercial and industrial loans, real estate loans, and consumer loans slightly moderated in July and August from the second quarter. Encouragingly, commercial real estate loan growth accelerated in the quarter under review.
Hence, a higher level of loans will likely aid average interest-earning assets. However, lower levels of client deposits and securities are expected to have shrunk the average balance sheet.
The Zacks Consensus Estimate of $133.5 million for average interest-earning assets for the quarter indicates a 4.5% decline from the last reported figure.
Also, the Federal Reserve raised rates by 150 basis points in total in the quarter. The policy rate, thus, reached 3.0-3.25%, the highest level since 2008. 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 2.8% to $472 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 second 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 third 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, global fixed-income markets and assets under management in the prior quarter, asset servicing and asset management fees are likely to have faced headwinds.
Investment management fees are expected to increase primarily due to the recapture of money market fee waivers, supported by higher Fed fund rates, partially offset by unfavorable markets.
The Zacks Consensus Estimate for total fee income is pegged at $1.25 billion, indicating a 4.6% fall from the prior quarter’s reported figure.
Expenses: NTRS’s investments in automation and wallet share deepening in the asset servicing and wealth management businesses 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 third quarter. Costs are likely to have increased due to inflation and increased hiring.
What Does the Zacks Model Say?
The proven Zacks model predicts that an earnings beat is likely for Northern Trust this time around. This is because NTRS has 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 are reported with our Earnings ESP Filter.
Earnings ESP: Northern Trust has an Earnings ESP of +0.19%.
Zacks Rank: Northern Trust currently carries a Zacks Rank of 3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Other Bank Stocks Worth a Look
BankUnited (BKU - Free Report) and Associated Banc-Corp (ASB - Free Report) are a few other stocks that you might want to consider, as these, too, have the right combination of elements to post an earnings beat in their upcoming releases, per our model.
The Earnings ESP for BKU is +1.32% and the company carries a Zacks Rank #3 at present. BKU is slated to report third-quarter 2022 results on Oct 20.
Associated Banc-Corp is scheduled to release third-quarter 2022 earnings on Oct 20. ASB, with a Zacks Rank #2 (Buy) at present, has an Earnings ESP of +2.39%.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.