{"id":48722,"date":"2017-01-18T17:33:35","date_gmt":"2017-01-18T23:33:35","guid":{"rendered":"http:\/\/news.medill.northwestern.edu\/chicago\/?p=48722"},"modified":"2017-01-18T17:33:35","modified_gmt":"2017-01-18T23:33:35","slug":"northern-trust-misses-estimate-stock-plummets","status":"publish","type":"post","link":"https:\/\/news.medill.northwestern.edu\/chicago\/northern-trust-misses-estimate-stock-plummets\/","title":{"rendered":"Northern Trust misses estimate, stock plummets"},"content":{"rendered":"

By Yifang(Evonne) Liu<\/strong><\/p>\n

Northern Trust Corp. stock dropped 4.7 percent after the company reported fourth-quarter net income of $1.11 per diluted share, compared with 99 cents in the prior year, missing analysts\u2019 estimate of $1.13 compiled by Bloomberg.<\/p>\n

Net income was $266.5 million, up 11 percent compared with $239.3 million in the prior-year quarter and up 3 percent compared with $257.6 million in the September quarter.
\n\u00a0<\/u><\/p>\n

\"front
Northern Trust Corp. entrance on Monroe Street.<\/figcaption><\/figure>\n

Chicago-based Northern Trust operates as a financial holding company that provides asset servicing, fund administration, asset management, fiduciary and banking solutions for corporations, institutions, families and individuals worldwide.<\/p>\n

\u201cNorthern Trust\u2019s revenue, which is driven by fees paid by their sticky clientele, is more stable than that of banks exposed to more cyclical businesses like trading or mortgage banking,\u201d wrote Greggory Warren, senior equity analyst of Morningstar Inc. in his research note.<\/p>\n

Revenue in the fourth quarter was $1.25 billion, up 7 percent compared with $1.22 billion last year.<\/p>\n


\nThe growth was mainly driven by stronger net interest income and increasing financial servicing fees, partially offset by higher operating expenses.<\/p>\n

Net interest income grew 11 percent to $329.3 million.<\/p>\n

\u201cNet interest income outperformed and beat expectations with help from higher short-term rates, lower premium amortization and larger balance sheet,\u201d wrote Ken Usdin, equity analyst at Jefferies LLC in his research note.<\/p>\n

Increasing operating expenses is a great concern of analysts.<\/p>\n

\u201cCore revenues tracked modestly below our estimates while operating expenses came in above expectations,\u201d said Gerard Cassidy, senior analyst at RBC Capital, in an email interview.<\/p>\n

Non-interest expense in the fourth quarter was $873.9 million, up 6 percent year-over-year and up 4 percent compared with the September quarter.<\/p>\n

\u201cIt\u2019s a great disappointment to see a consecutive high expense this quarter that the bank is not able to cut off enough on their expenses,\u201d said Marty Mosby, director of banking and equity strategies at Vining Sparks IBG, in a phone interview. \u201c2017 will really be a big year when interest rates will move higher and there will also be some regulatory relief and hopefully we get some improvements in overall corporate tax rates. Those are factors that will drive the momentum and banks can benefit from those changes and overall operating environment,\u201d he added.<\/p>\n

Revenue from trust, investment and other servicing fees increased 6 percent year-over-year to $794.4 million, primarily due to new business and favorable equity markets, partially offset by the unfavorable impact of movements in foreign exchange rates, according to the company\u2019s press release.<\/p>\n

\u201cThe currency shouldn\u2019t disrupt the momentum they have and rising interest rates environment has a stronger impact on the market than the currency changes have,\u201d Mosby said.<\/p>\n

For the year 2016, the company reported net income of $1.03 billion, or $4.32 per diluted share, compared with $973.8 million, or $3.99 per diluted share in 2015.<\/p>\n

Revenue was $4.99 billion, up 5 percent from $4.73 billion in 2015.<\/p>\n

Return on average common equity improved to 11.9 percent in 2016 from 11.5 percent in 2015.<\/p>\n

Photo at top: The main entrance of Northern Trust Corp. on LaSalle Street in Chicago. (Yifang (Evonne) Liu\/MEDILL)<\/div>\n","protected":false},"excerpt":{"rendered":"

By Yifang(Evonne) Liu Northern Trust Corp. stock dropped 4.7 percent after the company reported fourth-quarter net income of $1.11 per diluted share, compared with 99 cents in the prior year, missing analysts\u2019 estimate of $1.13 compiled by Bloomberg. Net income was $266.5 million, up 11 percent compared with $239.3 million in the prior-year quarter and […]<\/p>\n","protected":false},"author":385,"featured_media":48727,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3516],"tags":[],"class_list":["post-48722","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-winter-2017"],"yoast_head":"\nNorthern Trust misses estimate, stock plummets - Medill Reports Chicago<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/news.medill.northwestern.edu\/chicago\/northern-trust-misses-estimate-stock-plummets\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Northern Trust misses estimate, stock plummets - Medill Reports Chicago\" \/>\n<meta property=\"og:description\" content=\"By Yifang(Evonne) Liu Northern Trust Corp. stock dropped 4.7 percent after the company reported fourth-quarter net income of $1.11 per diluted share, compared with 99 cents in the prior year, missing analysts\u2019 estimate of $1.13 compiled by Bloomberg. 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