Decline in NII & Fee Income to Hurt Northern Trust's Q1 Earnings

Northern Trust Corporation NTRS is scheduled to release its first-quarter 2025 results on April 22, before market open. The company’s revenues and earnings are expected to improve from the year-ago reported level. In the last reported quarter, the bank recorded a positive earnings surprise of 11.9%. NTRS’ results benefited from a rise in fee income and net interest income (NII). Strong capital ratios were other positives. Northern Trust has an impressive earnings surprise history. Its earnings beat estimates in the trailing four quarters, with an average positive surprise of 10.63%.Northern Trust Corporation Price and EPS Surprise  Northern Trust Corporation price-eps-surprise | Northern Trust Corporation QuoteThe Zacks Consensus Estimate for NTRS’ first-quarter earnings of $1.85 per share has been unchanged over the past seven days. The figure indicates an 8.8% increase from the year-ago reported number. (See the Zacks Earnings Calendar to stay ahead of market-making news.)The consensus estimate for revenues is pegged at $1.95 billion, indicating a year-over-year rise of 18.2%.Key Factors & Estimates for NTRS’ Q1 ResultsNII & Loans: The Federal Reserve kept interest rates unchanged at 4.25-4.5% in the first quarter. As such, NTRS’ NII is likely to have been negatively impacted, given relatively higher funding costs.The Zacks Consensus Estimate for NII is pegged at $561.3 million in the quarter under review, indicating a decline of 0.5% on a sequential basis.In the first quarter, the lending scenario was not very impressive as Trump’s tariff plan resulted in uncertainty across the markets. Per the Fed’s latest data, the demand for overall loans was modest during the quarter. Thus, NTRS is likely to have witnessed some growth in loan demand, which is expected to have supported its average interest-earning asset growth in the quarter under review.The Zacks Consensus Estimate for average earning assets is pegged at $134.1 billion, indicating a marginal rise from the prior quarter’s reported figure.Non-Interest Income: Northern Trust calculates its asset servicing and wealth management servicing fees using a lag effect, relying on prior-quarter end valuations for these computations. Asset servicing fees comprise custody and fund administration, investment management, securities lending, and other fees.The weak equity market performance in the first quarter is likely to have negatively impacted NTRS’ custody and fund administration revenues, as well as its investment management fees.The Zacks Consensus Estimate for custody and fund administration fees is pegged at $447 million, indicating a 2% sequential decline.The Zacks Consensus Estimate for investment management fees is pegged at $153 million, indicating a decline of 1.9% on a sequential basis.The Zacks Consensus Estimate for total wealth management fees is pegged at $5439.4 million, indicating a sequential fall of 1.3%.For the first quarter of 2025, the Zacks Consensus Estimate for other operating income is pegged at $59.5 million, indicating a marginal decrease on a sequential basis.The Zacks Consensus Estimate for total fee income is pegged at $1.39 billion, indicating a marginal decrease from the prior quarter’s reported figure.Expenses: Northern Trust’s expenses are expected to have been high in the first quarter of 2025, given its rise in compensation and increased investment in equipment and software development.Asset Quality: NTRS is likely to have set aside a decent amount of money for potential bad loans, given the expectations of a higher-for-longer interest rate backdrop, recessionary fears and inflationary pressure. The Zacks Consensus Estimate non-performing assets in the first quarter of 2025 is pegged at $65.1 million, indicating a 16.2% rise on a sequential basis.What the Zacks Model Reveals for NTRSOur proven model does not predict an earnings beat for Northern Trust this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. This is not the case here, as you can see below.You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.Earnings ESP: The Earnings ESP for NTRS is 0.00%.Zacks Rank: The company currently carries a Zacks Rank of 3.Stocks That Warrant a LookHere are some bank stocks that you may want to consider, as our model shows that these have the right combination of elements to post earnings beat this time around.The Earnings ESP for Associated Banc-Corp ASB is +3.97% and it carries a Zacks Rank #3 at present. The company is slated to report first-quarter 2025 results on April 24.Over the past seven days, the Zacks Consensus Estimate for Associated Banc-Corp’s quarterly earnings has been revised upward to 57 cents per share.The Earnings ESP for Ameris Bancorp ABCB is +7.83%, and it currently carries a Zacks Rank #2. The company is slated to report first-quarter 2025 results on April 28.Over the past seven days, the Zacks Consensus Estimate for Ameris Bancorp’s quarterly earnings has been unchanged at $1.15 per share.Zacks' Research Chief Names "Stock Most Likely to Double"Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.This top pick is among the most innovative financial firms. With a fast-growing customer base (already 50+ million) and a diverse set of cutting edge solutions, this stock is poised for big gains. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.Free: See Our Top Stock And 4 Runners UpWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Northern Trust Corporation (NTRS): Free Stock Analysis Report Ameris Bancorp (ABCB): Free Stock Analysis Report Associated Banc-Corp (ASB): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks