Northern Trust NASDAQ: NTRS opened 2026 with what Chairman and CEO Mike O’Grady described as “a strong start,” citing a supportive market and rate backdrop alongside continued execution of the company’s “One Northern Trust” strategy.
On the call discussing first-quarter results, management highlighted double-digit revenue growth, expanding margins, and substantial capital return to shareholders. The quarter also featured commentary on how the company is deploying artificial intelligence across the franchise and updates to guidance for the full year.
First-quarter results: revenue growth, margin expansion, and capital return
O’Grady said first-quarter trust fees rose 11% year-over-year, net interest income increased 15%, and total revenue climbed 14%. He added that the company generated “more than 700 basis points of positive operating leverage,” lifting the pre-tax margin by nearly 500 basis points to 32% and contributing to earnings per share growth of 43%.
Chief Financial Officer Dave Fox reported net income of $526 million and EPS of $2.71. Return on average common equity was 17.4%, which O’Grady noted was “at the higher end of our new medium-term target range.” Fox also said the company returned $510 million to common shareholders during the quarter—$151 million in dividends and $359 million in share repurchases—representing a 100% payout ratio. O’Grady said buybacks helped drive a 5% reduction in share count versus the prior year.
Fox said trust investment and other servicing fees totaled $1.3 billion, up 11% year-over-year, supported by “favorable markets, currency, and new business generation.” He also pointed to a 33% year-over-year increase in other non-interest income driven by “very strong FX trading and securities commission and trading income,” which benefited from elevated macro volatility and uncertainty.
Net interest income reaches a quarterly record as deposits surge
Fox said net interest income on a fully taxable-equivalent basis rose 1% sequentially to $662 million, which he called “a new quarterly record,” and increased 15% from a year earlier. Average deposits were $129 billion, up 8% from the fourth quarter and 11% year-over-year, which Fox attributed in part to volatility and uncertainty that drove higher liquidity levels.
Net interest margin on an FTE basis fell sequentially to 1.75%. Fox said the decline primarily reflected “several large short-term institutional deposits” and the absence of a higher FTE adjustment recorded in the prior quarter.
In response to an analyst question about the unusually large deposits, Fox said Northern Trust occasionally receives “largely unexpected, extremely large deposits” tied to client repositioning activity. He said the increase was roughly $9 billion and that the company expected to keep about $4 billion to $5 billion of that in average deposits going forward, describing these balances as not core operational deposits and not typically long-lasting.
Business segment highlights: Wealth, Asset Servicing, and Asset Management
Wealth Management: O’Grady said momentum from 2025 carried into the first quarter, with “low double-digit trust fee growth” and regional trust fee growth accelerating to 11%, supported by robust performance in the Central Region. Fox reported Wealth Management fees of $601 million, up 11% year-over-year, and client AUM of $498 billion, down 2% sequentially but up 11% from a year earlier. Pre-tax profit rose 9% year-over-year, while the pre-tax margin was flat at 37.1% as the firm “continued to reinvest in the business to support future growth,” Fox said.
O’Grady outlined growth initiatives that include increasing revenue-generating roles by high single-digit percentages by year-end, including “significant increases in critical producer roles.” He also said centers of influence—attorneys, accountants, and other professionals—drive nearly 25% of new business activity, and the company is targeting a 10% increase in opportunities in 2026 through a more structured outreach framework and the hiring of a senior leader. O’Grady added that opportunities originating from digital channels rose nearly 50% year-over-year in the quarter.
When asked about recruiting in what one analyst called an extremely competitive wealth labor market, O’Grady said Northern Trust’s value proposition includes its brand, positioning in the upper tiers of the market, and what he described as differentiated family office solutions that combine banking capabilities with fiduciary and trust expertise.
Asset Servicing: O’Grady said Asset Servicing produced trust fee growth of 10% and “over 700 basis points of year-over-year pre-tax margin expansion.” Fox reported Asset Servicing fees of $741 million, up 10% year-over-year, and pre-tax margin expansion of 740 basis points to 28.3%, driven by elevated deposits, volatility-driven capital markets activity, and changes in the new business approach.
O’Grady said the company won nine new mandates across foundations, endowments, and healthcare institutions, including four not-for-profit healthcare systems, and noted that Northern Trust now serves three-quarters of the top 50 healthcare systems in the U.S. He also said the firm’s alternatives assets under administration were approaching $1 trillion. In capital markets, O’Grady said the business grew 34% amid elevated volatility, including robust foreign exchange and core brokerage fees.
Asset Management (NTAM): O’Grady said NTAM made “good progress” with strength in liquidity, alternatives, and equities. He said liquidity recorded its 13th consecutive quarter of positive flows, with associated AUM reaching $350 billion. He also cited a fourth consecutive quarter of positive ETF flows and highlighted the launch of the Northern Trust U.S. Equity ETF, as well as the firm’s first Saudi Arabia equity index strategy funded with $1 billion in client capital.
O’Grady also pointed to NTAM’s direct indexing capabilities becoming available on Envestnet’s platform and said the business was recognized by Barron’s as a top fund family in 2025, ranking fourth overall and fifth in general equity out of 46 fund families.
AI strategy and digital assets
O’Grady said AI is becoming increasingly embedded in operations and that the company is accelerating deployment to support efficiency, scale expertise, and improve client outcomes “while maintaining the resilience, governance, and client confidence that define our franchise.” He described three targeted outcomes: “hyper-personalization,” “AI-generated alpha,” and “infinite scalability.”
As examples, O’Grady highlighted a “One Wealth Assistant” aimed at integrating Northern Trust Institute insights into workflows and described AI-assisted research and product construction tools in asset management. He also discussed “digitizing work through agents” to support operating leverage.
On digital assets, management pointed to several initiatives across businesses. O’Grady said the company onboarded five new clients in the quarter for custody and other services related to tokenized real-world assets, U.S. stablecoins, European money market funds, and carbon credits. He also said NTAM launched a tokenized share class for its NIF Treasury Instruments Portfolio, which he described as Northern Trust’s entry into the digital asset marketplace for institutional-grade liquidity strategies.
Guidance raised for net interest income; leadership update in investor relations
Fox said Northern Trust now expects full-year 2026 net interest income growth in the “mid to high single digits” versus the prior year, up from the prior outlook of low to mid single digits. He reiterated expectations for more than 100 basis points of positive operating leverage and said the firm expects to return “at least 100% of our earnings to shareholders.”
In Q&A, O’Grady and Fox emphasized the company’s view that the quarter benefited from a constructive environment, including relatively high equity levels and volatility that supports capital markets performance, while also pointing to continued execution on strategic initiatives. Fox said expense growth discipline is centered on “productivity funding investment” and described the expense line as dynamic, with flexibility to respond to market conditions.
Fox also announced that Jennifer Childe, Head of Investor Relations, will retire. He said Steve Carroll, currently CFO of Northern Trust Asset Management, will step into the role and work with Childe during the transition.
About Northern Trust NASDAQ: NTRS
Northern Trust Corporation NASDAQ: NTRS is a global financial services firm headquartered in Chicago that provides asset servicing, asset management and wealth management solutions to institutions, corporations and high-net-worth individuals. The company's core businesses include custody and fund administration, investment operations outsourcing, trust and fiduciary services, private banking, and retirement and defined contribution plan services.
Northern Trust's product and service offerings span custody and fund accounting, portfolio and performance analytics, securities lending, cash management and foreign exchange, as well as discretionary and non-discretionary investment management.
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