Northern Trust (NTRS -1.82%), a global provider of asset servicing, wealth management, and banking solutions, announced its financial results for the second quarter of fiscal 2025 on July 23, 2025. The company reported earnings per share (GAAP) of $2.13 and non-GAAP revenue of $2.00 billion, both topping analyst estimates of $2.06 and $1.97 billion, respectively. While non-GAAP revenue grew modestly over consensus estimates, both earnings and revenue were sharply lower compared to the prior year quarter, due mostly to a large one-time gain the year before. Management highlighted robust growth in fee-generating client assets and record net interest income (non-GAAP, FTE basis). Overall, the period saw modest outperformance, sound expense control, and solid operational progress, but highlighted ongoing challenges in terms of efficiency and credit risk.
| Metric | Q2 2025 | Q2 2025 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS (GAAP) | $2.13 | $2.06 | $4.34 | (51)% |
| Revenue (Non-GAAP) | $2.00 billion | $1.97 billion | $2.72 billion | (26)% |
| Net Interest Income (Non-GAAP) | $615.2 million | $529.8 million | 16 % | |
| Noninterest Expense | $1.42 billion | $1.53 billion | -7% | |
| Return on Average Common Equity | 14.2 % | 31.2 % | (17.0 pp) |
Source: Analyst estimates for the quarter provided by FactSet.
Company Overview and Business Focus
Northern Trust provides asset servicing for institutional clients and delivers wealth management services to high-net-worth individuals and families. Its business model relies heavily on two main areas: asset servicing, which supports investment funds and institutional investors, and wealth management, which targets high-net-worth and ultra-high-net-worth clients through personalized financial services.
Its recent priorities include expanding technology capabilities, enhancing family office solutions (a suite of services for ultra-wealthy families), and growing its presence in international markets. Success factors for the company hinge on growing client assets, managing regulatory requirements, maintaining credit quality, and continuing to provide scalable, fee-based services.
Quarterly Highlights and Financial Developments
The quarter brought modest beats on both the top and bottom line. Net interest income (non-GAAP, fully taxable equivalent basis)—the difference between revenue earned on interest-bearing assets and the costs of funding those assets—reached a record high of $615.2 million, up 16% from the prior year. This was driven by higher deposits, which rose to an average of $122.4 billion.
Trust, investment, and other servicing fees—the main source of fee revenue—grew 6% year over year. Asset servicing trust fees rose 6% to $691.8 million, primarily due to favorable markets, favorable currency movements, and net new business. Wealth management trust, investment, and other servicing fees increased 5% year over year, with the Family Office Solutions product launching to address demand from clients with $100 million or more in net worth. Regional wealth growth was broad-based, with central, east, west, and global family office divisions each posting gains between 3% and 6%.
Total assets under custody and administration climbed 9% to $18.1 trillion as of June 30, 2025, supported by favorable markets and currency translation. Assets under management, a key indicator of future fee generation, grew 11% to $1.70 trillion as of June 30, 2025. Growth in both custody and management was reported across US and international operations, reflecting a strong push into global markets and more complex investment vehicles like long-term asset funds in Europe and the UK.
The company maintained solid capital levels, closing the period with a common equity tier 1 (CET1) ratio of 12.2%, well above regulatory minimums of 4.5%. Noninterest expense (GAAP) fell 8%, a decrease that included the absence of prior-year restructuring and charity charges. Still, Ongoing investments in technology continued (with equipment/software spend up 6%), and headcount increased 2% to 23,400 employees, underscoring a focus on scaling new services and platforms.
Certain risks became more prominent. Provision for credit losses (GAAP) increased to $16.5 million, more than doubling from the prior year, due to a handful of non-performing loans and a more cautious macroeconomic outlook. The company noted that nonaccrual loans (those no longer earning interest) rose to $92.8 million, now 0.21% of total loans as of June 30, 2025, compared to 0.09% a year earlier. Management continues to monitor exposures to commercial real estate and specialties sensitive to broader market swings.
On the competitive front, Northern Trust continues to invest in differentiated solutions, such as its Family Office Solutions and alternative investment platforms, to meet evolving client needs. Recent discussions with Bank of New York Mellon (NYSE:BK) about a possible merger have brought attention to long-term industry positioning, though no deals have been announced.
Buybacks and dividends remained central to shareholder return policy. The company returned $485.6 million to shareholders (through both share repurchases and dividends), exceeding net income for the period.
Looking Forward: Guidance and Key Watchpoints
Net interest income is projected to achieve low- to mid-single-digit growth for FY2025, based on stable deposit levels and current interest rate expectations.
Investors should monitor trends in asset servicing and wealth management flows—particularly whether fee growth can keep pace if equity markets weaken. Credit quality and provision levels are also important, given the recent uptick in nonaccrual loans and reserves. Management highlighted ongoing investments in technology and operational transformation, as well as the need to drive further efficiency to support margin improvement over time.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
