Northern Trust (NTRS) to Post Q4 Earnings: What to Expect?
Northern Trust Corporation’s NTRS fourth-quarter and 2023 results are scheduled to be released on Jan 18, before market open. The company’s revenues are expected to have improved from the year-ago reported level, while earnings are expected to have declined.
In the last reported quarter, NTRS’ earnings missed the Zacks Consensus Estimate. Results were affected by a fall in the net interest income (NII). A deterioration in the credit quality was another headwind in the third quarter. However, a rising fee income was a positive.
Northern Trust has a mixed earnings surprise history. Its earnings missed estimates in two of the trailing four quarters, met once and surpassed once, the positive surprise being 0.08%, on average.
Northern Trust Corporation Price and EPS Surprise
Northern Trust Corporation price-eps-surprise | Northern Trust Corporation Quote
NTRS’ activities in the to-be-reported quarter were adequate to win analysts’ optimism. As a result, the Zacks Consensus Estimate for fourth-quarter earnings of $1.25 per share has moved marginally upward in the past week. The figure indicates a decline of 24.2% from the year-ago quarter’s reported number.
The Zacks Consensus Estimate for revenues is pegged at $1.69 billion, suggesting a rise of 11.3% from the prior-year quarter’s reported figure.
For 2023, revenues of $6.91 billion are expected to rise 2.2% year over year.
Key Factors & Estimates for Q4
Loans & NII: The lending scenario was subdued for the quarter under review on higher interest rates and an uncertain macroeconomic backdrop. Per the Fed’s latest data, the demand for commercial and industrial loans weakened in the first two months of the quarter under review from third-quarter 2023. Nevertheless, the demand for consumer and commercial real estate loans showed signs of improvements in November from third-quarter 2023.
Hence, a weaker lending environment is likely to have affected average interest-earning assets. The Zacks Consensus Estimate of $125.26 billion for average earning assets indicates a 2.2% sequential decline.
The Federal Reserve paused interest rate hikes in the quarter under review. Thus, the policy rate remained at a 22-year high of 5.25-5.5%. Despite the high interest rate environment, softer loan demand and rising funding costs are anticipated to have negatively impacted NII in the to-be-reported quarter.
The Zacks Consensus Estimate for NII is pegged at $437 million, implying a sequential decline of 4.1%. Management expects NII to be in line with the third-quarter reported figure of $469 billion.
Fee Income: Northern Trust uses a lag effect to calculate its asset servicing fees and wealth management servicing fees, i.e., computations are based on the prior-quarter end valuations.
Asset servicing fees comprise custody and fund administration, investment management, securities lending, and other fees.
The soft equity market performance in the third quarter is likely to have affected custody and fund administration, and investment management fees for NTRS in the fourth quarter.
The Zacks Consensus Estimate for custody and fund administration fees is pegged at $425 million, suggesting a sequential decrease of 0.7%. The Zacks Consensus Estimate for investment management fees is pegged at $137 million, which remaining unchanged sequentially.
In the fourth quarter, Northern Trust repositioned part of its securities portfolio, which is expected to result in a realized loss of less than $200 million.
The consensus mark for wealth management servicing fees is pegged at $480 million, implying a sequential decline of 1.2%.
The consensus estimate for total fee income is pegged at $1.24 billion, indicating a 1.9% decline from the prior quarter’s reported figure.
Expenses: Northern Trust’s expenses are expected to have been high in the fourth quarter on rising compensation, and equipment and software expenses. Moreover, general inflationary pressures are likely to have inflated costs, whereas wage inflation is anticipated to have escalated personnel expenses.
What Does the Zacks Model Say?
Our proven Zacks model predicts an earnings beat for Northern Trust this time around. The combination of a positive Earnings ESP and Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. That's the case here.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: Northern Trust has an Earnings ESP of +4.29%.
Zacks Rank: Northern Trust currently carries a Zacks Rank of 3.
Other Banks Worth a Look
Here are a couple of other bank stocks that you may want to consider, as our model shows that these also have the right combination of elements to post an earnings beat this time around.
Bank OZK OZK is slated to report fourth-quarter and 2023 results on Jan 18. It has an Earnings ESP of +5.97% and a Zacks Rank #3 at present.
Over the past week, the Zacks Consensus Estimate for OZK’s quarterly earnings per share has moved marginally south to $1.45.
First Horizon Corporation FHN is scheduled to release fourth-quarter and 2023 earnings on Jan 18. The company, which carries a Zacks Rank #3 at present, has an Earnings ESP of +4.17%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The consensus estimate for FHN’s quarterly earnings has been unchanged at 31 cents per share over the past 60 days.
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Northern Trust Corporation (NTRS) : Free Stock Analysis Report
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Bank OZK (OZK) : Free Stock Analysis Report
