Northern Trust (NASDAQ:NTRS) reported sharply higher second-quarter 2026 earnings, helped by strong fee growth, higher net interest income and a sizable gain tied to its Visa Inc. holdings, while management raised its full-year outlook for revenue and net interest income.
The Chicago-based financial services company reported net income of $792.2 million, or $4.23 per share, for the quarter. Return on average common equity was 25.9%, pre-tax income was $1.1 billion and the reported pre-tax margin was 39.6%, Chief Financial Officer Dave Fox said on the company’s earnings call.
Visa Gain Boosts Results, Partly Offset by Charges
Reported results included a $525 million pre-tax gain in other operating income from Northern Trust’s participation in the second tranche of the Visa Class B common stock exchange offer. Fox said that gain was partly offset by a $74 million pre-tax loss tied to repositioning the available-for-sale securities portfolio.
Expenses in the quarter also included several notable items: a $62 million pre-tax charge related to software dispositions, a $51 million pre-tax severance charge linked to a reduction in force and a $33 million pre-tax compensation expense tied to a one-time equity grant. In aggregate, Fox said the notable items had an approximately $306 million favorable pre-tax income impact and an approximately $232 million favorable impact to net income.
Excluding notable items, O’Grady said earnings per share increased 40% year over year. Total revenue rose 13%, driven by 10% growth in trust fees, 11% growth in net interest income and 69% growth in capital markets revenue, including foreign exchange trading and securities commissions and trading income. Non-interest expense increased 5% excluding notable items.
Fox said the securities portfolio repositioning improved its earnings profile while keeping duration relatively short, maintaining a neutral liquidity position and preserving flexibility as the rate environment changes. In response to an analyst question, he said the balance sheet restructuring should add “about $30-plus million” to net interest income annually.
Wealth Management Fees Rise as Ultra-High-Net-Worth Focus Continues
O’Grady said the wealth management business delivered a solid quarter, with trust fees up 10% year over year. Assets under management in wealth management were $534 billion at quarter-end, up 7% sequentially and 14% from a year earlier. Wealth management pre-tax income was $334 million, producing a pre-tax margin of 37%.
The company highlighted continued momentum in its global family office and ultra-high-net-worth businesses. O’Grady said global family office revenue increased 9% in the first half of 2026, and revenue from wealthy individuals and families with more than $100 million in assets outpaced the broader portfolio.
Management also said Northern Trust is extending its global family office capabilities to more ultra-high-net-worth clients through its Family Office Solutions offering. O’Grady told analysts the offering is resonating with both new prospects and existing clients, though scaling it depends on hiring and building out teams.
The company is also expanding its alternatives platform for wealth clients, adding funds during the quarter across secondaries, buyout, venture and growth strategies, while expanding its custom “fund of one” offering. O’Grady said capital raised in the first half of the year or currently in process is approaching 80% of last year’s full-year total.
Asset Servicing Revenue Grows, Capital Markets Activity Strengthens
Asset servicing revenue rose 16% year over year, excluding notable items, and the business generated a pre-tax margin of more than 30% on that basis, according to O’Grady. Fox said asset servicing fees totaled $757 million, up 9% from a year ago, while assets under custody and administration for asset servicing clients reached $18.6 trillion, up 10% year over year.
O’Grady said alternatives remain an important growth area, with assets under administration across hedge funds, private capital and semi-liquid structures now exceeding $1 trillion. The company added two semi-liquid mandates during the quarter, and new product launches from existing hedge fund clients increased approximately 50% from the prior quarter.
Capital markets-related businesses also performed well. O’Grady said revenue from outsourced capital markets solutions, including Complete FX and Integrated Trading Solutions, was up almost 50% year over year. Fox said securities lending income was $29 million, up 46% year over year, driven by elevated demand for U.S. equities, robust borrowing in Asia Pacific and IPO-related securities.
Asset Management Sees ETF and Liquidity Momentum
Northern Trust Asset Management continued to build momentum in the quarter, with O’Grady pointing to diversified asset gathering across ETFs, liquidity, tax alpha and alternatives.
ETF flows were positive for the fifth consecutive quarter, with strength in U.S. quality large-cap, U.S. equity factor tilt and tax-efficient fixed income strategies. Liquidity flows reached a record level, extending the company’s streak to 14 consecutive quarters of positive organic liquidity flows. O’Grady said Northern Trust continues to gain market share in both the U.S. and EMEA and remains a top 10 money market fund manager in the U.S.
The company also cited growth in tax alpha strategies, including direct indexing and long/short tax alpha offerings, and continued demand for custom alternatives solutions.
Guidance Raised as Capital Returns Continue
Fox said Northern Trust now expects full-year net interest income to increase 9% to 10% year over year, up from prior guidance for mid- to high-single-digit growth. The company also raised its full-year total revenue growth outlook to 9% to 10%, compared with its prior view for mid-single-digit growth. Excluding notable items, management expects to deliver approximately 400 basis points of operating leverage for the full year.
The company returned $499 million to common shareholders during the quarter through $148.8 million in declared dividends and $350.6 million in share repurchases. Year to date, O’Grady said Northern Trust has returned more than $1 billion to shareholders. Fox said the second-quarter payout ratio was 63% on a reported basis and approximately 90% excluding notable items.
Northern Trust’s common equity Tier 1 ratio under the standardized approach was 12.2%, up 20 basis points from the prior quarter. The board approved an $0.08, or 10%, increase to the quarterly common dividend.
During the question-and-answer session, management said the company expects some normalization in foreign exchange, capital markets and securities lending activity after a strong quarter. Fox also said certain large institutional deposits that supported net interest income in the first half are not expected to continue into the third quarter.
O’Grady said the company remains focused on organic growth, disciplined expense management and investment in capabilities including artificial intelligence, which he described as “augmented intelligence” aimed at improving service, expertise and controls while keeping employees and clients at the center.
About Northern Trust (NASDAQ:NTRS)
Northern Trust Corporation (NASDAQ: NTRS) is a global financial services firm headquartered in Chicago that provides asset servicing, asset management and wealth management solutions to institutions, corporations and high-net-worth individuals. The company’s core businesses include custody and fund administration, investment operations outsourcing, trust and fiduciary services, private banking, and retirement and defined contribution plan services.
Northern Trust’s product and service offerings span custody and fund accounting, portfolio and performance analytics, securities lending, cash management and foreign exchange, as well as discretionary and non-discretionary investment management.
