Northern Trust earnings rose in the third quarter of 2026, with net income increasing 40% from a year earlier to $642.9 million as servicing fees and net interest income expanded. The October 21 results showed diluted earnings per share of $3.40, up from $2.29 a year earlier but below $4.23 in the second quarter, when a large Visa-related gain boosted profit.
Key Takeaways
- Revenue rose 13% year over year on a fully taxable equivalent basis, outpacing 5% expense growth.
- Quarterly comparisons were distorted by a much larger Visa-related gain and several expense charges in the second quarter.
- Northern Trust returned $514.2 million to common shareholders and increased its quarterly dividend to $0.88 per share.
Table of Contents
- Northern Trust earnings improve despite sequential decline
- Fee growth spans asset servicing and wealth management
- Lower funding costs support interest income
- Dividend increase accompanies share repurchases
- Conclusion
Northern Trust earnings improve despite sequential decline
Northern Trust’s third-quarter results announcement showed total revenue of $2.302 billion on a fully taxable equivalent basis, up from $2.031 billion a year earlier. Noninterest expenses rose to $1.493 billion from $1.423 billion, allowing revenue growth to exceed cost growth. Fully taxable equivalent revenue is a non-GAAP measure that adjusts for the tax treatment of certain income.
The year-over-year improvement contrasts with a 19% sequential decline in net income. Second-quarter results included a $525.4 million pretax gain from participation in the second Visa Exchange Offer, alongside a $73.9 million securities loss and charges for software dispositions, severance and an employee equity grant.
Third-quarter results included a smaller $14.7 million incremental Visa-related gain and a $34 million gain on the sale of the guardianship services business. Together, those two items added $36.8 million to net income after tax.
| Item | Details |
|---|---|
| Assets under custody/administration | $19.897 trillion at September 30, 2026; preliminary |
| Assets under management | $1.963 trillion at September 30, 2026; preliminary |
| Return on average common equity | 20.1%, compared with 14.8% in Q3 2025 |
| Credit-loss provision | $5.4 million, primarily related to the charge-off of one commercial and institutional loan |
| Effective tax rate | 19.3%, down from 26.1% in Q3 2025 |
Fee growth spans asset servicing and wealth management
Trust, investment and other servicing fees increased 8% year over year to $1.373 billion. Asset Servicing fees rose 8% to $761.5 million, while Wealth Management fees increased 9% to $611.5 million.
Northern Trust attributed higher custody, fund administration and investment management fees primarily to favorable markets. Global Family Office fees also benefited from asset inflows, while securities lending fees increased on higher trading volumes and spreads.
Client assets supported the annual fee expansion. Assets under custody and administration rose 9% from September 2025, and assets under management increased 11%. Both measures were slightly below June 2026 levels. The company said current-quarter client asset figures remain preliminary until its Form 10-Q is filed.
Lower funding costs support interest income
Net interest income on a fully taxable equivalent basis rose 14% year over year to $679.1 million, although it slipped 1% from the second quarter. Northern Trust attributed the annual increase primarily to higher deposits, a favorable deposit mix and lower funding costs.
Average deposits increased 6% year over year to $123.42 billion but fell 3% sequentially. Net interest margin reached 1.83%, compared with 1.70% a year earlier and 1.81% in the preceding quarter.
Dividend increase accompanies share repurchases
Northern Trust increased its quarterly common dividend to $0.88 per share from $0.80. During the quarter, it declared $161.9 million in common dividends and repurchased approximately 1.9 million shares for $352.3 million.
Chairman and Chief Executive Michael O’Grady said the company had returned more than $1.5 billion to common shareholders through the first nine months of 2026. He also said all three businesses delivered organic trust-fee growth.
Conclusion
Northern Trust’s annual earnings improvement reflected growth in fees and interest income, while unusually large second-quarter items complicated sequential comparisons. The next Form 10-Q will provide the finalized client asset figures that remain preliminary in the earnings release.
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Disclaimer
This FinanceVelix article provides general information, not personalized financial, investment, legal, or tax advice. Market prices, interest rates and economic conditions can change; investments carry a risk of loss. Facts reflect the material available when published and may change. Check important information independently and consult a qualified professional when needed. Mentioning an asset, company, or service is not an endorsement.
