NTRS

Northern Trust is a high-quality, capital-light trust bank — wealth management, asset servicing and asset management — whose core engine is doing exactly what you'd want. Trust, Investment and Other Servicing Fees grew 6% to $5,017.8M and net interest income jumped 11% to $2,411.0M (MD&A Table 4), so total revenue of $8,086.4M was actually held back only by the absence of 2024's one-offs. The headline FY2025 net income decline of -14.5% to $1.74B and EPS drop to $8.74 look alarming in isolation but are an accounting artifact: FY2024 carried an $878.4M net gain from the Visa Exchange Offer. Strip that out and the underlying trend is steady, profitable growth, not deterioration. Return on average common equity of 14.4% (our derived ROE 13.4%) and a 34.6% net margin confirm this is a genuinely good business.

Capital allocation reinforces the quality. The company repurchased $1.27B of stock (up 35.8%), shrinking the share count ~5% YoY, raised the dividend to $3.10/share at a conservative 35.5% payout, and grew retained earnings 7% to $16.7B. Cash rose 25.6% to $5.87B and operating cash flow was strong. The balance sheet is normal for a custody bank (liabilities/equity 12.67x), with credit risk minimal — the provision for credit losses was actually a release. This is a franchise you can own through a cycle.