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Northern Trust (NTRS) Unveils New Group for Digital Assets

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·3 min read
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In a bid to leverage the digital asset markets, Northern Trust Corporation NTRS has formed a Digital Assets and Financial Markets group.

The new group will combine the teams catering to the fast-growing digital asset markets and those which provide market access and insights into the traditional securities services space.

Given the increasing preference for “development of digital markets and investing in digital assets” along with allocation in more traditional asset classes such as equities, fixed income, alternatives and private assets, the move is a strategic fit.

Pete Cherecwich, president of Asset Servicing at Northern Trust, noted, “Rather than create separate business lines, by aligning our focus on digital and traditional markets together, we can continue to develop services and capabilities that truly reflect and enable our clients’ evolving investment strategies.”

He added, “as more institutional investors are entering the digital arena, the rest of the securities industry is also facing an unprecedented amount of change arising from new regulation, market evolution and the development of emerging technology capabilities. For investors wishing to navigate this environment, our new combined group will provide access to market-leading expertise, industry insights and continued innovations across all markets and all asset classes.”

Markedly, NTRS has been focused on initiating businesses. The company's innovative technology-driven hedge fund administration capabilities brought to the marketplace via Northern Trust Hedge Fund Services provide an attractive proposition to the clients. It is also eyeing opportunities to expand its private capital space. The implementation of the Target2-Securities (T2S) strategy to provide better services to its clients is commendable. Northern Trust continues to diversify across geographical and client channels. These efforts will drive its organic growth.

The company’s revenues witnessed a compounded annual growth rate (CAGR) of 2.7% over the last four years (2018-2021) on rising non-interest and net interest income (NII), with some annual volatility. The rising trend continued in the first quarter of 2022. Although Northern Trust’s loan balances declined in the first quarter, it witnessed a rising trend, seeing a CAGR of 13.5% in the last three years (ended 2021).

Northern Trust seems increasingly confident of organic growth across both Asset Servicing (AS) and Wealth Management (WM) segments on the grounds of a likely strong pipeline in the upcoming quarters. We believe that the company is well-positioned to maintain its organic growth in the days to come, backed by the economic recovery.

Shares of this Zacks Rank #3 (Hold) company have lost 18.9% so far this year compared with the industry’s 21.6% decline.


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Major Banks Worth a Look

A couple of better-ranked major banks are Comerica CMA and M&T Bank MTB. At present, CMA sports a Zacks Rank #1 (Strong Buy) and MTB carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

So far this year, shares of Comerica have lost 12.1%, while M&T Bank has rallied 8.5%.

Over the past 30 days, the Zacks Consensus Estimate for Comerica’s current-year earnings has been revised 1.2% upward, while the same for M&T Bank has moved 2.4% north.

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