NORTHERN TRUST CORPORATION FORM 10-K

Press release·02/24/2025 22:21:36

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Northern Trust Corporation, a financial services company, reported its annual financial results for the fiscal year ended December 31, 2024. The company’s net income increased by 12% to $1.23 billion, driven by growth in its asset servicing and asset management businesses. Total revenue rose 10% to $6.43 billion, with net interest income increasing 14% to $1.43 billion and non-interest income rising 8% to $4.99 billion. The company’s assets under custody and administration grew 12% to $12.4 trillion, while assets under management increased 10% to $1.2 trillion. Northern Trust’s return on equity (ROE) was 14.1%, and its return on assets (ROA) was 0.93%. The company’s financial condition remains strong, with a capital ratio of 11.3% and a liquidity ratio of 104.5%.

Northern Trust Corporation’s Strong Financial Performance in 2024

Northern Trust Corporation, a leading provider of wealth management, asset servicing, asset management and banking solutions, reported impressive financial results for the year ended December 31, 2024. The company’s revenue, profitability, and client assets all saw significant growth compared to the prior year, showcasing its ability to navigate the evolving financial landscape.

Revenue Growth Driven by Noninterest Income

Northern Trust’s total revenue in 2024 reached $8.3 billion, a 22% increase from $6.8 billion in 2023. This was primarily driven by a 28% rise in Noninterest Income, which made up 74% of total revenue.

The increase in Noninterest Income was largely attributable to higher Other Operating Income, which surged to $1.2 billion from $228.7 million in the prior year. This was mainly due to a $896.7 million gain related to Northern Trust’s participation in a Visa, Inc. share exchange offer and a $68.1 million gain on the sale of an equity investment. Trust, Investment and Other Servicing Fees also grew 8% to $4.7 billion, reflecting favorable markets and net new business.

Net Interest Income, which comprises the remaining portion of revenue, increased 10% to $2.2 billion. This was driven by higher average interest rates and a favorable funding mix shift, partially offset by an unfavorable balance sheet composition.

Profitability Soars, Driven by Revenue Growth and Expense Management

Northern Trust’s profitability surged in 2024, with Income before Income Taxes increasing 82% to $2.66 billion and Net Income rising 83% to $2.03 billion. This impressive performance was enabled by the strong revenue growth, as well as effective expense management.

Noninterest Expense increased 7% to $5.63 billion, primarily due to higher Compensation, Equipment and Software, and Outside Services expenses. However, the company was able to offset these increases through disciplined cost control, as evidenced by a 4% decline in Other Operating Expense.

The company’s Return on Average Common Equity improved significantly, reaching 17.4% in 2024 compared to 10.0% in 2023. This demonstrates Northern Trust’s ability to generate robust returns for its shareholders.

Robust Asset Growth and Healthy Asset Quality

Northern Trust’s total assets grew 3% to $155.5 billion as of December 31, 2024, driven by a $4.5 billion increase in Federal Reserve and Other Central Bank Deposits. The company’s securities portfolio also expanded, with Total Debt Securities increasing 4% to $51.3 billion.

The loan portfolio, however, declined 9% to $43.4 billion, primarily due to lower levels of commercial and institutional and non-U.S. loans, partially offset by higher commercial real estate and private client loans. Despite this decrease, asset quality remained strong, with Nonaccrual Loans to Total Loans holding steady at 0.13%.

The Allowance for Credit Losses decreased slightly to $198.4 million, reflecting a $10.2 million decline in the allowance evaluated on an individual basis, partially offset by a $3.0 million increase in the allowance evaluated on a collective basis. This demonstrates Northern Trust’s prudent risk management practices and the overall health of its loan portfolio.

Robust Capital Position and Shareholder Returns

Northern Trust maintained a strong capital position, with Total Stockholders’ Equity increasing 7% to $12.8 billion as of December 31, 2024. The company’s capital ratios remained well above regulatory requirements, providing a solid foundation for future growth and shareholder returns.

During 2024, Northern Trust returned $1.5 billion in capital to common stockholders through a combination of $608.4 million in dividends and $937.8 million in share repurchases. The company’s Dividend Payout Ratio decreased to 30.7% from 59.1% in the prior year, reflecting its commitment to maintaining a balanced approach to capital allocation.

Outlook and Conclusion

Northern Trust’s impressive financial performance in 2024 highlights its ability to adapt to changing market conditions and deliver value to its clients and shareholders. The company’s diversified business model, strong risk management practices, and focus on innovation position it well for continued success in the years ahead.

As the financial industry navigates an evolving landscape, Northern Trust’s commitment to providing exceptional client service, prudent risk management, and shareholder value creation will be crucial in maintaining its competitive edge. Investors can look forward to the company’s continued growth and leadership in the wealth management, asset servicing, and asset management sectors.