Northern Trust Corporation’s (NTRS) fourth quarter earnings of 82 cents per share were ahead of the Zacks Consensus Estimate of 67 cents. Last year, the company reported a gain of $1.47 per share. Net income was $200.3 million versus $342.3 million last year. Earnings were dragged down by lower foreign exchange trading income as well as diminished net interest income due to a poor interest rate environment.
Northern Trust reported full year earnings of $3.16 per share, down 9% from $3.47 last year.
Net interest income totaled $244.2 million, down 30.0% year-over-year. Net interest margin (NIM) equaled 1.43% in the quarter, 54 basis points lower than that of last year. The decreases in NIM and net interest income reflect the diminished value of non-interest-related funding sources resulting from significant interest rate cuts over the past year.
Northern Trust reported a decline in provision for credit losses to $40.0 million from $60.0 million in the year earlier period. Non-performing loans totaled $278.5 million. Net charge-offs increased to $32.3 million from $15.8 million in the prior-year quarter.
Average earning assets of $67.5 billion were 3.0% lower year over year, driven by a decrease in average money market assets, partially offset by an increase in the U.S. government sponsored agency securities and corporate debt.
Northern Trust’s risk-based capital ratios remained strong, with Tier 1 capital ratio of 13.6%, total risk-based capital ratio of 16% and leverage ratio of 8.8%.
The quarter reflected a continued weakness in the broader economic environment. Credit metrics remain negatively expanded. Due to the overall stress in the banking sector, we expect Northern Trust’s net interest margin to remain compressed. However, the company’s sound capital structure and diversified business operations will help it to emerge unscathed from the current crisis.
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