Northern Trust Corporation

.

Fourth Quarter 2018 Quarterly Earnings Review

.

January 23, 2019

EXECUTIVE SUMMARY

  • Net income of $409.9 million, earnings per common share of $1.80 and return on average common equity of 17.0%

  • The fourth quarter included:

    • $5.7 million charge associated with severance-related and restructuring charges

    • $30.0 million benefit for income taxes

SUMMARY RESULTS & KEY METRICS

$ in millions (except EPS and as noted)

4Q 2018

4Q 2017

3Q 2018

Revenue (FTE1)

$1,516.7

+5%

+2%

Noninterest Expense

1,021.9

+2%

+2%

Provision for Credit Losses

(4.0)

(69%)

(56)%

Net Income

$409.9

+15%

+9%

Earnings per Share

$1.80

+19%

+14%

Return on Equity2

17.0%

15.1%

15.1%

Assets under Custody / Administration3 (in billions)

$10,125

(6)%

(7)%

Assets under Custody3 (in billions)

$7,594

(6)%

(7)%

Global Custody Assets3 (in billions)

$4,700

(5)%

(6)%

Assets under Management3 (in billions)

$1,069

(8)%

(9)%

% Change Vs.

  • 1 Revenue stated on a fully taxable equivalent(FTE) basisis a non-GAAP financial measure. A reconciliation to reportedrevenueprepared inaccordance with U.S. generally accepted accounting principles(GAAP)isincluded in theAppendix on page 14.

  • 2 Actual numbersfor all periods, not % change.

  • 3 Client assets for the current quarter are considered preliminary until the Form 10-K isfiled with the Securitiesand Exchange Commission.

TOTAL REVENUE

$ in millions

Total Revenue (FTE1)

4Q 2017

  • Trust, Investment & Other Servicing Fees were up 3% year-over-year and down 1% sequentially.

  • Foreign Exchange Trading Income increased 24% year-over-year and 9% sequentially.

  • Other Noninterest Income was up 4% year-over-year and 36% sequentially.

  • Net Interest Income (FTE1) was up 9% year-over-year and 3% sequentially.

1Q 2018

2Q 2018

3Q 2018

4Q 2018

Trust, Investment and

Other Noninterest

Other Servicing Fees

Income

FX Trading Income

Net Interest Income

(FTE1)

Categoriesmay not sum due to rounding.

1 Net interest income and total revenue stated on an FTE basisare non-GAAP financial measures. A reconciliation of these measures to reported resultsprepared in accordance with U.S. GAAP isincluded in the Appendix on page 14.

TRUST, INVESTMENT & OTHER SERVICING FEES

$ in millions (except as noted)

Trust, Investment & Other Servicing Fees

4Q 2018

Custody & Fund Administration

$375.8

+2%

-%

Investment Management

105.3

(1)%

(3)%

Securities Lending

21.7

(14)%

(10)%

Other

32.8

-%

(2)%

Total Corporate & Institutional Services

$535.6

-%

(1)%

Central

$151.0

+1%

(1)%

East

103.1

+11%

-%

West

80.3

+7%

-%

Global Family Office

63.9

+7%

+2%

Total Wealth Management

$398.3

+6%

-%

Client Assets1 (in billions):

C&IS AUC/A

$9,491

(6)%

(7)%

C&IS AUC

$6,971

(6)%

(7)%

Global Custody Assets

$4,700

(5)%

(6)%

C&IS AUM

$791

(9)%

(10)%

Securities Lending Collateral

$150

(11)%

(10)%

Wealth Management AUC/A

$635

(3)%

(6)%

Wealth Management AUC

$623

(4)%

(6)%

Wealth Management AUM

$279

(4)%

(6)%

% Change Vs. 4Q 2017 3Q 2018

1 Client assets for the current quarter are considered preliminary until the Form 10-K isfiled with the Securitiesand Exchange Commission.

C&IS Trust, Investment & Other Servicing Fees were flat year-over-year and down 1% sequentially

  • Custody& fund administration fee growth year-over-year was primarilydue to new business, partially offset by the unfavorable impact of movements in foreign exchange rates and unfavorablemarkets.

  • Investment management fees decreased year-over-year due to outflows, partiallyoffset by an increase related to favorable markets and a change to gross revenue pres entation. Sequentially, inves tm ent management fees decreased primarilydue to

    • o u tfl o w s .

  • Securities lending fees decreased year-over-year and sequentiallyprimarilyreflecting lower loan volumes and spreads.

Wealth Management Trust, Investment & Other Servicing Fees were up 6% year-over-year and flat sequentially

  • The increase across all regions year-over-year was primarilyattributable to new business, a change in presentation of certain fees resulting from the adoption of the new revenue recognition standard, and favorable markets.

  • The increase in Global FamilyOffice fees was primarilyattributable to new business and favorable m arkets .

  • Sequentially, Wealth Managem ent trus t fees were relatively unchanged from the prior quarter, primarily due to new business, offset byunfavorable markets.

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Northern Trust Corporation published this content on 23 January 2019 and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on 23 January 2019 13:13:06 UTC