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Northern Trust Corporation’s (NTRS - Free Report) fourth-quarter 2016 earnings per share of $1.11 lagged the Zacks Consensus Estimate of $1.14. However, the reported figure compared favorably with 99 cents in the year-ago quarter.
Escalating operating expenses was a concern. However, top-line growth was a favorable factor. Further, the quarter witnessed a rise in assets under custody as well assets under management.
Net income came in at $266.5 million, up 11% from the prior-year quarter.
For full-year 2016, net income was $1.03 billion or $4.32 per share, compared with $973.8 million or $3.99 per share in the prior year. The Zacks Consensus Estimate was $4.29.
For full-year 2016, revenues on a fully taxable equivalent basis, were $4.99 billion, up 5% from $4.73 billion in 2015. Moreover, results surpassed the Zacks Consensus Estimate of $4.92 billion.
Total revenue of $1.25 billion missed the Zacks Consensus Estimate of $1.26 billion. However, the reported figure was up 7% year over year.
On a fully taxable equivalent basis, net interest income of $329.3 million was up 11% year over year. This was driven by increased levels of average earning assets.
Net interest margin (NIM) was 1.20%, up 9 basis points from the prior-year quarter. The increase chiefly reflected higher yields on earning assets.
Non-interest income rose 6% from the year-ago quarter to $917.1 million. Rise in trust, investment and other servicing fees, higher foreign exchange trading income, along with rise in security commissions and trading income,were the primary reasons for this increase.
Non-interest expenses were up 6% year over year to $873.9 million in the quarter. The rise was mainly stemmed by an elevation in all components of expenses.
Improvement in Assets Under Management and Custody
As of Dec 31, 2016, Northern Trust’s total assets under custody increased 11% year over year to $6.72 trillion, while total assets under management rose 8% to $942.4 billion.
Credit Quality: A Mixed Bag
Total allowance for credit losses were $192 million, down 18% year over year. Further, non-performing assets declined12.2% year over year to $165.4 million as of Dec 31, 2016.
Yet, net charge-offs were $10.9 million, up from $2.9 million from the year-ago quarter figure. Also, credit provision was $22.0 million in the quarter, while it was $18.5 million in the prior-year quarter.
Strong Capital Position
Under the Advanced Approach, as of Dec 31, 2016, Tier 1 capital ratio, total capital ratio and Tier 1 leverage ratio were 13.7%, 15.1% and 8.0% respectively, each exceeding the regulatory requirements.
During 2016, Northern Trust repurchased 6.05 million shares for $411.2 million at an average price of $67.91 per share. Notably, during the reported quarter, the company repurchased 0.8 million shares for $65.1 million at an average price of $79.10 per share.
Our Viewpoint
Results of Northern Trust display a decent performance considering the quarter’s challenging backdrop. We remain optimistic by the continued growth in assets under custody, revenues and an improving credit quality to some extent. However, increase in expenses might pose a threat to its profitability. Further, the new regulations could put strain on the company’s fundamentals.
Northern Trust Corp. Price, Consensus and EPS Surprise
Bank of America Corporation (BAC - Free Report) reported fourth-quarter 2016 earnings. Rise in trading revenue as well as mortgage banking fees led to earnings of 40 cents per share, which surpassed the Zacks Consensus Estimate of 38 cents. Further, the figure was 48% higher than the year-ago quarter number.
Driven by interest income, Wells Fargo & Company’s (WFC - Free Report) fourth-quarter 2016 earnings recorded a positive surprise of about 3%. Adjusted earnings of $1.03 per share outpaced the Zacks Consensus Estimate by 3 cents. Moreover, it compared favorably with the prior-year quarter’s earnings of $1.00 per share.Including net hedge ineffectiveness accounting impact of 7 cents, earnings came in at 96 cents per share.
Driven by impressive trading revenues, JPMorgan Chase & Co.’s (JPM - Free Report) fourth-quarter 2016 earnings of $1.71 per share easily surpassed the Zacks Consensus Estimate of $1.42. Also, the figure reflects a 30% rise from the year-ago period. Notably, the results included a legal charge of $230 million and a tax benefit of $475 million related to the utilization of certain deferred tax assets.
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Northern Trust (NTRS) Q4 Earnings Lag, Expenses Rise
Northern Trust Corporation’s (NTRS - Free Report) fourth-quarter 2016 earnings per share of $1.11 lagged the Zacks Consensus Estimate of $1.14. However, the reported figure compared favorably with 99 cents in the year-ago quarter.
Escalating operating expenses was a concern. However, top-line growth was a favorable factor. Further, the quarter witnessed a rise in assets under custody as well assets under management.
Net income came in at $266.5 million, up 11% from the prior-year quarter.
For full-year 2016, net income was $1.03 billion or $4.32 per share, compared with $973.8 million or $3.99 per share in the prior year. The Zacks Consensus Estimate was $4.29.
Top Line Grows; Costs Flare Up
For full-year 2016, revenues on a fully taxable equivalent basis, were $4.99 billion, up 5% from $4.73 billion in 2015. Moreover, results surpassed the Zacks Consensus Estimate of $4.92 billion.
Total revenue of $1.25 billion missed the Zacks Consensus Estimate of $1.26 billion. However, the reported figure was up 7% year over year.
On a fully taxable equivalent basis, net interest income of $329.3 million was up 11% year over year. This was driven by increased levels of average earning assets.
Net interest margin (NIM) was 1.20%, up 9 basis points from the prior-year quarter. The increase chiefly reflected higher yields on earning assets.
Non-interest income rose 6% from the year-ago quarter to $917.1 million. Rise in trust, investment and other servicing fees, higher foreign exchange trading income, along with rise in security commissions and trading income,were the primary reasons for this increase.
Non-interest expenses were up 6% year over year to $873.9 million in the quarter. The rise was mainly stemmed by an elevation in all components of expenses.
Improvement in Assets Under Management and Custody
As of Dec 31, 2016, Northern Trust’s total assets under custody increased 11% year over year to $6.72 trillion, while total assets under management rose 8% to $942.4 billion.
Credit Quality: A Mixed Bag
Total allowance for credit losses were $192 million, down 18% year over year. Further, non-performing assets declined12.2% year over year to $165.4 million as of Dec 31, 2016.
Yet, net charge-offs were $10.9 million, up from $2.9 million from the year-ago quarter figure. Also, credit provision was $22.0 million in the quarter, while it was $18.5 million in the prior-year quarter.
Strong Capital Position
Under the Advanced Approach, as of Dec 31, 2016, Tier 1 capital ratio, total capital ratio and Tier 1 leverage ratio were 13.7%, 15.1% and 8.0% respectively, each exceeding the regulatory requirements.
During 2016, Northern Trust repurchased 6.05 million shares for $411.2 million at an average price of $67.91 per share. Notably, during the reported quarter, the company repurchased 0.8 million shares for $65.1 million at an average price of $79.10 per share.
Our Viewpoint
Results of Northern Trust display a decent performance considering the quarter’s challenging backdrop. We remain optimistic by the continued growth in assets under custody, revenues and an improving credit quality to some extent. However, increase in expenses might pose a threat to its profitability. Further, the new regulations could put strain on the company’s fundamentals.
Northern Trust Corp. Price, Consensus and EPS Surprise
Northern Trust Corp. Price, Consensus and EPS Surprise | Northern Trust Corp. Quote
Currently, Northern Trustcarriesa Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Performance of other Major Banks
Bank of America Corporation (BAC - Free Report) reported fourth-quarter 2016 earnings. Rise in trading revenue as well as mortgage banking fees led to earnings of 40 cents per share, which surpassed the Zacks Consensus Estimate of 38 cents. Further, the figure was 48% higher than the year-ago quarter number.
Driven by interest income, Wells Fargo & Company’s (WFC - Free Report) fourth-quarter 2016 earnings recorded a positive surprise of about 3%. Adjusted earnings of $1.03 per share outpaced the Zacks Consensus Estimate by 3 cents. Moreover, it compared favorably with the prior-year quarter’s earnings of $1.00 per share.Including net hedge ineffectiveness accounting impact of 7 cents, earnings came in at 96 cents per share.
Driven by impressive trading revenues, JPMorgan Chase & Co.’s (JPM - Free Report) fourth-quarter 2016 earnings of $1.71 per share easily surpassed the Zacks Consensus Estimate of $1.42. Also, the figure reflects a 30% rise from the year-ago period. Notably, the results included a legal charge of $230 million and a tax benefit of $475 million related to the utilization of certain deferred tax assets.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2017?
Who wouldn't? As of early December, the 2016 Top 10 produced 5 double-digit winners including oil and natural gas giant Pioneer Natural Resources which racked up a stellar +50% gain. The new list is painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. Be among the very first to see it>>