Can Trust Income Drive Northern Trust's (NTRS) Q3 Earnings?
Zacks Investment Research | Oct 15, 2017 09:55PM ET
Northern Trust Corporation’s (NASDAQ:NTRS) third-quarter results, scheduled for Oct 18, are expected to reflect a rise in C&IS Trust, Investment and Other Servicing Fees — one of the major revenue components.
Notably, the company provides majority of its asset management services through its C&IS unit, which generates more than 50% of total revenue. The Zacks Consensus Estimate for C&IS Trust, Investment and Other Servicing fees of $493 million for the to-be-reported quarter reflects a year-over-year improvement of 9.3%.
Moreover, Northern Trust uses a lag effect to calculate its corporate custody and investment management fees, i.e. the computations are based on the prior quarter-end valuations. Since the performance of equity markets were relatively decent in the second quarter, the company will likely be able to register growth in custody, servicing and management fees.
Here are the other factors that might influence the company’s Q3 performance:
Modest Rise in Net Interest Income (NII): The Zacks Consensus Estimate for average earnings assets of $111.5 billion reflects a marginal decline from the year-ago quarter. Nevertheless, overall loan growth remained decent in the quarter. Given the improvement in loan balances along with the effect of rising interest rates, Northern Trust should record an increase in NII.
Foreign Exchange Trading Revenues to Rise Modestly: Given the increase in overall foreign exchange (“FX”) trading volatility, as well as higher volumes in the third quarter, the company’s revenues from FX trading will likely increase for the quarter.
Marginal Increase in Expenses: Despite some cost-saving initiatives, Northern Trust’s continued investments in new business activities may lead to a slight increase in expenses.
Let’s have a look at what our quantitative model predicts:
According to our quantitative model, it cannot be conclusively predicted if Northern Trust will be able to beat earnings estimates in the third quarter. This is because it does not have the right combination of two main ingredients — a positive Zacks Investment Research
Get The News You Want
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.