Northern Trust Corporation

Reported Q2 2026 net income was $792.2 million, EPS was $4.23, ROE was 25.9%, pre-tax income was $1.1 billion, and pre-tax margin was 39.6%. Excluding notable items, total revenue increased 13% year over year, expenses increased 5% year over year, and operating leverage was over 700 basis points. Trust, investment, and other servicing fees were $1.3 billion, up 10% year over year; assets under custody and administration were $20 trillion, up 11% year over year; assets under management were $2 trillion, up 16% year over year. Wealth management AUM was $534 billion, up 14% year over year, and asset servicing AUC/A was $18.6 trillion, up 10% year over year. Management now expects full-year net interest income to be up 9%-10% year over year, full-year total revenue to grow 9%-10% year over year, and full-year operating leverage of approximately 400 basis points, excluding notable items.

Mike O'Grady framed the quarter as proof that the One Northern Trust strategy is working, citing the eighth straight quarter of positive organic fee growth, strong operating leverage, and growth across wealth management, asset servicing, and asset management. He stressed that the firm is investing in talent, digital lead generation, alternatives, and AI, which he described as 'augmented intelligence' meant to strengthen service, expertise, and integrity rather than replace human judgment. His tone was confident and constructive, with repeated emphasis on disciplined execution and resilience across market environments.

Dave Fox highlighted strong reported results and then walked through the notable items: a $525 million pre-tax Visa gain, a $74 million pre-tax loss tied to securities portfolio repositioning, plus $62 million of software disposition charges, $51 million of severance, and $33 million of one-time equity compensation. He said these items together had an approximately $306 million favorable pre-tax impact and approximately $232 million favorable impact to net income, and that the securities repositioning should add about $30-plus million annually to NII. He also noted the CET1 ratio rose to 12.2%, Tier 1 leverage was 7.6%, the firm returned $499 million to common shareholders, and the board approved an $0.08 or 10% increase in the quarterly dividend. Guidance was raised to 9%-10% year-over-year growth in both NII and total revenue, with full-year operating leverage expected at about 400 basis points.

Analysts focused on why full-year operating leverage guidance was only about 400 basis points after a very strong first half; management said the second half will face tougher comparisons, likely normalization in foreign exchange, capital markets, securities lending, and some large deposits, and it is assuming flat markets and stable rates. Questions also centered on deposit stickiness and wealth fees: management said some deposits were idiosyncratic and temporary, and that wealth fee volatility was mainly due to lagged pricing, GFO billing dynamics, alternatives valuation timing, and seasonal tax-related outflows, with a better third quarter expected. Other questions covered the use of Visa proceeds, where management said priority is flexible deployment across balance sheet repositioning, business investment or inorganic opportunities, and share repurchases, and the asset servicing margin outlook, where management said it is intentionally being selective on new business and driving toward higher-margin offerings.