Northern Trust Earnings: Net Interest Income Lackluster as Deposits Decline

Northern Trust reported an okay start to the year. Revenue of $1.76 billion and EPS of $1.51 was slightly below the FactSet consensus estimates of $1.78 billion and $1.52, respectively. However, net interest income fell sequentially which we think disappointed investors. Average interest-bearing deposits fell 2% sequentially and 9% from the year-ago period and the average non-interest-bearing deposit fell 9% sequentially and 46% from the year-ago period which resulted in average deposits declining 4% sequentially and 19% from the year-ago period to $112.2 billion. Looking ahead, Northern Trust sees deposits averaging about $110 billion in April thus far and expects an incremental decline after tax season. As we trim our net interest income forecasts, we expect to lower our fair value estimate on Northern Trust’s shares by a single-digit percentage.