With a combined revenue of $21 trillion and $2.1 trillion in profits, the 2026 Fortune 500 is the definitive list of America's largest companies.

Fortune 500

AI is a major force shaping this year’s list—but it’s far from the only story.

World's Most Admired Companies

Almost $20 trillion in revenue—and a record-breaking $1.87 trillion in profits. Introducing the 2025 Fortune 500, the definitive list of the biggest companies in America.

Leaders in all industries rely more than ever on Big Tech—and appreciate the giants that deliver, at scale, without drama.

The Fortune 500, in its 70th year in 2024, ranks the biggest U.S. companies by revenue.

The 26th edition of the list shows how much esteem Big Tech giants command among other business leaders.

The 25th Fortune World’s Most Admired Companies list suggests that tech giants’ peers respect them as much as ever.

The Fortune 500, in its 69th year in 2023, ranks the biggest U.S. companies by revenue.

Just as it dominates our economy, Big Tech now dominates Fortune’s annual ranking of corporate reputation.

This year’s Fortune 500 marks the 68th running of the list.

After a year in which humanity leaned more heavily than ever on tech giants, see which companies topped Fortune's ranking of corporate reputation.

This year’s Fortune 500 marks the 67th running of the list.

F500-2021-443-Northern Trust

The wealth and investment management company offers a broad catalogue of financial services for wealthy institutions, individuals, and families.

For an astounding 13th straight year, Apple claims the top spot in Fortune’s annual ranking of corporate reputation, based on a survey of almost 3,800 executives, directors, and analysts.

This year's Fortune 500 marks the 66th running of the list.

F500-2020-440-Northern-Trust

Chicago-based Northern Trust focuses on financial services for corporations, institutional investors, and ultra-high-net-worth individuals. It grew revenue by 3.5% in 2019.

Here are the World's Most Admired Companies for 2019 as ranked in their industries. See who made the list.

This year's Fortune 500 marks the 65th running of the list.

Here are the World's Most Admired Companies for 2018 as ranked in their industries. See who made the list.

This year's Fortune 500 marks the 64th running of the list.

Here are the World's Most Admired Companies for 2017 as ranked in their industries. See who made the list.

This year's Fortune 500 marks the 63rd running of the list.

Here are the World's Most Admired Companies for 2016 as ranked in their industries. See who made the list.

This year's Fortune 500 marks the 62nd running of the list.

Business insiders have spoken: Asked which companies they most admire, more than 4,100 executives, directors, and analysts chose these top 50 All-Stars.

This year's Fortune 500 marks the 61st running of the list. Wal-Mart claims the top spot again. See who made the list.

Wal-Mart stayed on top as its sales crept closer to half-a-trillion dollars. Apple moved into the top five. And UnitedHealth Group continued its steady climb. 

Sector

Industry

Current All-Star Rank

Previous All-Star Rank

Industry Rank

Previous Industry Rank

Overall Score

Innovation

People Management

Use of Corporate Assets

Social Responsibility

Quality of Management

Financial Soundness

Long-Term Investment Value

Quality of Products/Services

Global Competitiveness

Key Financials (last Fiscal Year)

Revenues ($M)

Profits ($M)

Assets ($M)

Total Stockholder Equity ($M)

Profit Ratios

Profit as % of Revenues

Profits as % of Assets

Profits as % of Stockholder Equity

Earnings Per Share (last Fiscal Year)

Earnings Per Share ($)

EPS % Change (from prior fiscal year)

EPS % Change (5 year annual rate)

EPS % Change (10 year annual rate)

Total Return

Total Return to Investors (last year)

Total Return to Investors (5 year, annualized)

Total Return to Investors (10 year, annualized)

Northern Trust was founded in 1889 by Byron Laflin Smith. Disturbed by the excess and corruption that marked the Gilded Age, he vowed to create a financial institution Chicago’s growing class of investors and businesspeople could trust. On day one the company opened six accounts with $137,981 in deposits; by the end of 2024 Northern Trust had more than $1.6 trillion under management. Over the years Northern Trust was a pioneer in many areas, including being one of the first U.S. corporations to offer employees free life insurance and a pension plan, operating the first air-conditioned office building in Chicago, and being one of the first banks in the country to process checks electronically. Today it provides asset servicing, investment management, and wealth management services for institutions and high-net-worth individuals and families, and employs more than 23,000 employees around the world.

Q2 2026

Q1 2026

Q4 2025

Q3 2025

Q2 2025

Q1 2025

Q4 2024

Northern Trust (NTRS): Company Profile, Stock Price, News, Rankings

legacy

Northern Trust

northern trust

Good day, and welcome to the Northern Trust Corporation 4th Quarter 2024 Earnings Conference Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Jennifer Child, Director of Investor Relations. Please go ahead.

Thank you, operator, and good morning, everyone. Welcome to Northern Trust Corporation's 4th Quarter 2024 Earnings Conference Call. Joining me on our call this morning is Mike O'Grady, our Chairman and CEO Dave Fox, our Chief Financial Officer John Landers, our Controller and Tres Stegman from our Investor Relations team. Our 4th quarter earnings press release and financial trends report are both available on our website at northerntrust.com. Also on our website, you will find our quarterly earnings review presentation, which we will use to guide today's conference call.

This January 23 call is being webcast live on northerntrust.com. The only authorized rebroadcast of this call is the replay that will be made available on our website through February 23. Northern Trust disclaims any continuing accuracy of the information provided in this call after today. Please refer to our Safe Harbor statement regarding forward looking statements in the back of the accompanying presentation, which will apply to our commentary on this call. During today's question and answer session, please limit your initial query to 1 question and one related follow-up.

This will allow us to move through the queue and enable as many people as possible the opportunity to ask questions as time permits. Thank you again for joining us. Let me turn the call over to Mike O'Grady.

Thank you, Jennifer. Let me join in welcoming you to our Q4 2024 earnings call. Our Q4 results capped off a solid year of progress executing against our strategic priorities. Relative to the prior year, 4th quarter trust fees were up 12% and net interest income grew 15%. Excluding notables in the prior year, revenue was up 13% and earnings per share grew by more than 50%.

Importantly, we generated positive trust fee and total operating leverage for the 2nd consecutive quarter, while continuing to make significant investments in our business and infrastructure. For the full year, excluding notables, revenue was up 8% and we generated positive trust fee operating leverage and total operating leverage in excess of 2 points, which translated into EPS growth of 24%. We also returned more than $400,000,000 to shareholders in the 4th quarter and $1,500,000,000 for the full year, reflecting a 5 year high. Our results benefited from strong market performance, but also reflect continued progress implementing our One Northern Trust strategy. Turning to Slide 4.

At the beginning of last year, we launched our One Northern Trust strategy, which serves as our roadmap to becoming a consistently high performing company and producing meaningful value for all stakeholders. Our strategy is underpinned by 3 pillars: optimizing growth, strengthening resiliency and managing risk and driving productivity. Turning to Slide 5. We made significant progress across all three pillars in 2024. Let's begin with optimizing growth.

Our organic growth trajectory improved across all three businesses with good momentum exiting 2024. Our One Northern Trust strategy places an emphasis on enhancing the client experience while driving sustainable, scalable organic growth. Leveraging the capabilities of the entire firm, we deepened existing client relationships, adding products and services to meet their increasingly complex needs. We also embraced a more intentionally united focus for servicing our global client franchise, executing a joint calling program, which resulted in over 140 new business opportunities. As an example, Entam, our asset management business, worked in close partnership with our global family office and asset servicing businesses to develop a money market solution for a client seeking greater tax efficiency for its sizable cash investments.

This turned out to be highly attractive to a number of our clients and we experienced one of the fastest fundraises in NTM history, raising nearly $3,000,000,000 over the course of 6 months with participation from 18 clients. As we enter 2025, we will further institutionalize these approaches through enterprise wide initiatives aligning with meeting our clients' greatest needs and key industry trends such as alternative investment solutions, family office services and liquidity solutions. We will also continue to prioritize growth in wealth and asset management and foster stronger collaboration between both businesses. Relative to strengthening resiliency and managing risk, critical to maintaining our reputation for strength and stability for clients, regulators and the markets, last year, we designed and launched a multiyear effort to uplift our risk and control system and added new capabilities to strengthen resiliency. We invested in technology to eliminate legacy software applications, mature our cloud environment and bolster our cyber defenses.

We also made steady progress automating processes and adopting additional artificial intelligence tools, thereby reducing the number of manual processes meaningfully. In support of these initiatives, we created a new operating model and made a number of strategic hires. In 2025, we will continue to prioritize investments to further strengthen our resiliency, including modernizing our core platforms, accelerating our cloud adoption and pursuing additional opportunities to automate and deploy AI. We made meaningful progress driving productivity in 2024 and laid the groundwork to generate efficiencies in the coming years. We focused on key cross functional areas in 2024, such as workforce and vendors, ending the year with headcount 1% lower than 2 years ago, despite launching a number of growth initiatives and adding resources to support our resiliency efforts.

Within Asset Servicing, we've reduced headcount for 7 consecutive quarters, translating to a more than 7% decrease relative to peak staffing levels. Importantly, many of the resiliency initiatives have also resulted in significant savings, particularly from automation and digitization. Going forward, we will continue to enhance our productivity efforts, including leveraging the office of the Chief Operating Officer to implement more structural change to further centralize, standardize and automate operations and processes. Turning to our business unit level performance, beginning with Wealth Management on Slide 6. In 2024, we made foundational investments to deliver higher levels of organic growth on a more consistent basis.

We grew our sales talent by nearly 20%, enhanced our lead flow channels and grew our prospect pipeline materially. More recently, we transitioned our executive leadership and made important strategic hires across various markets and functions. As a result of these efforts, we saw steady improvement throughout the year in our organic growth trajectory, with particular strength in GFO. We also increased wealth deposits by 9% and expanded our segment pretax margin by nearly 400 basis points relative to the prior year. And as a testament to the value proposition we provide to clients, we were awarded Best Private Bank in the U.

S. For the 13th time in the past 16 years by the Financial Times Group. In 2025, Wealth Management will continue to maintain and strengthen our lead position in the upper wealth tiers. Within our Global Family Office business, we will continue to optimize existing client relationships, bolster investment advisory capabilities and expand into new markets, including international areas with significant potential. By establishing a separate ultrahigh net worth practice, we will leverage our world class family office platform to better serve wealthy families with more than $100,000,000 in net worth whose needs differ from those of our core wealth clients.

We also plan to deepen our penetration of select target markets in the U. S. That have significant wealth and where we have an opportunity to increase our market share. To capitalize, we will add talent, invest in brand awareness and pursue market specific growth opportunities. We will also expand our suite of alternative investment solutions for wealth clients.

Turning to Asset Management on Slide 7. We refreshed our strategy in 2023 following the hiring of Daniel Gamba, our Asset Management President. This included focusing on products where we have the clear right to win and more fully leveraging the full capabilities of the firm. We made meaningful progress in 2024 through investing in our platform and in core products. We refined our go to market partnership with Asset Servicing, creating more comprehensive solutions for clients and prospects, which resulted in more than 35 new client wins.

Leveraging the success, we launched multiple products specifically geared toward the needs of our Asset Servicing, GFO and ultra high net worth wealth segments. As a result, we realized positive net flows for the year, including 13% growth in liquidity, which surpassed $300,000,000,000 in AUM and generated positive long term flows in the second half of the year. We also improved the trajectory of our organic fee growth meaningfully, all while delivering investment performance above our benchmarks. We aim to carry this momentum into 2025 by investing in areas of growth that are both aligned with secular trends in the industry and where we have the right to win. These include expanding our alternatives offerings, capturing growth in custom SMAs and broadening our ETF presence, while simultaneously maintaining our focus on core strength in liquidity solutions, indexing, quant and fixed income.

Turning to asset servicing on Slide 8. Last year, we began to pivot the focus of our Asset Servicing business to pursue scalable growth in the core business, leveraging existing capabilities rather than bespoke build outs to generate positive operating leverage and maximize our value to both clients and shareholders. To support this effort, we implemented disciplined criteria for new business generation to ensure that it is accretive both at inception and on an ongoing basis. As a result, we bid on fewer opportunities in 2024, yet saw no meaningful degradation to our win rate. We also prioritized growth within our highly scalable Capital Markets business, which grew 17% in 2024, with roughly 50% of this growth coming from new clients.

These new clients in turn became prospects for our core custody and fund administration services. As a result, we finished the year with improved organic growth and profitability and a solid pipeline of business to onboard. In 2025, we will continue the momentum, investing in areas to support our clients' evolving needs and to capitalize on industry changes and asset flow trends. This includes sharpening our focus on global private markets and targeted asset owner clients and accelerating the growth of our Banking and Capital Markets business. I hope these additional slides have given you a deeper understanding of our business and strategic objectives.

Let's turn to our medium term financial targets on Slide 9. By focusing on driving organic growth and generating positive fee and total operating leverage, our medium term targets are to achieve an expense to trust fee ratio of 105% to 110%, pre tax margins above 30% and an ROE at the upper half of our range of 10% to 15%, along with double digit EPS growth and meaningful capital return to shareholders. In conclusion, we're confident in our One Northern Trust strategy and determined to execute with discipline to be a consistently high performing company for all our stakeholders. Our success couldn't be possible without the unwavering efforts of our more than 23,000 global partners. I'd like to thank them for their ongoing support of our clients with service, expertise and integrity, the enduring principles that underlie all that we do.

And with that, I'll turn it over to Dave to review the financials. Dave?

Thanks, Mike. Let me join Jennifer and Mike in welcoming you to our Q4 2024 earnings call. Let's discuss the financial results of the quarter starting on Page 11. This morning, we reported 4th quarter net income of 455,000,000 earnings per share of $2.26 and our return on average common equity was 15.3%. Excluding notables relative to the prior year, the stronger U.

S. Dollar was immaterial to revenue growth, but favorably impacted our expense growth by approximately 50 basis points. Excluding notables relative to the prior quarter, currency impacts unfavorably impacted our 4th quarter revenue growth by approximately 50 basis points, largely within our asset servicing, custody and fund administration segment and favorably impacted our expense growth also by an approximately 50 basis points. Trust investment and other servicing fees totaled $1,200,000,000 a 2% sequential increase and a 12% increase compared to last year. Net interest income on an FTE basis was $574,000,000 a new record, up 1% sequentially and up 15% from a year ago.

Our assets under custody and administration were down 4% sequentially, but up 9% as compared to the prior year. Our assets under management were down 1% sequentially, but up 12% year over year. And overall, our credit quality remains very strong. Excluding notable items in all periods, other non interest income was up 13% sequentially and up 17% over the prior year. Revenue was up 3% sequentially and up 13% on a year over year basis.

Expenses were up 1.2% sequentially and up 5.5% over the prior year. And earnings per share increased by more than 50% as compared to the prior year. Turning to our Asset Servicing results on Page 12. Our Asset Servicing business performed well in the quarter. Transaction volumes were healthy, capital markets activities were up 20% and new business growth continues to be booked at attractive margins.

Assets under custody and administration for asset servicing clients were $15,600,000,000,000 atquarterend, reflecting a 9% year over year increase due to strong market levels and client inflows, partially offset by unfavorable currency movements. They were down sequentially due to unfavorable currency movements and weaker markets, particularly bonds. Asset servicing fees totaled 676,000,000 dollars custody and fund administration fees were $457,000,000 up 9% year over year, largely reflecting the impact from strong underlying equity markets and new business generation. Both year over year and sequential comparisons were dampened by the client exits we discussed in the Q2, which are now fully reflected in our run rate. Assets under management for asset servicing clients were $1,200,000,000,000 up 12% over the prior year.

Investment management fees within asset servicing were $157,000,000 up a strong 20% year over year due to favorable markets and new business activities. Moving to our Wealth Management business on Page 13. Wealth Management also had a healthy quarter with particular strength in GFO. Assets under management for our Wealth Management clients were $451,000,000,000 atquarterend, up 12% year over year, including 5% growth in the global family office AUM. Trust investment and other servicing fees for Wealth Management clients were $547,000,000 up 14% year over year due to strong equity markets and modestly higher flows.

Moving to Page 14 and our balance sheet net interest income trends. Our average earning assets were down 1% on a linked quarter basis as an increase in loans and securities was offset by a decline in cash held with the Fed and other central banks. Duration of our securities portfolio is 1.6 years and the total balance sheet duration continues to be less than 1 year. Net interest income on an FTE basis was $574,000,000 up 1% relative to the 3rd quarter and our net interest margin was 1.71%. The strength was attributable to several factors.

First, the deposit mix came in modestly better than our expectations. Average deposits were $113,000,000,000 flat with 3rd quarter levels, but non interest bearing deposits increased 7% on a linked quarter basis and increased 100 basis points as a percentage of the total mix to 15.5%. 2nd, deposit pricing improved. As part of our focus on client liquidity management, we made certain pricing adjustments to be more aligned with current market conditions. And as expected, we continue to realize a very strong deposit beta on institutional accounts relative to 4th quarter rate cuts.

3rd, we saw a pickup in loan activity. And 4th, we continue to have higher than trend quarterly contributions from transactional and other items, although not as strong as what we observed in the Q3. Turning to our expenses on Page 15. Non interest expense was approximately $1,400,000,000 in the 4th quarter, up 1% sequentially, but down 1% as compared to the prior year. Excluding notable items in the prior periods listed on the slide, expenses in the 4th quarter were up 1.2% sequentially and up 5.5% year over year.

Let's now go back and review our core expenses from the quarter. Compensation expense was up 5.5% over the prior year, reflecting the impact of this year's base pay adjustments, modest levels of hiring associated with our modernization initiative and underlying growth in the business. And outside services expenses increased 7% relative to the prior year period, largely due to incremental modernization and resiliency spend. It was down 2% sequentially as we started to see some consulting expense shift into compensation expense as we made permanent hires to replace consultants. Equipment and software expense increased 9% year over year, mostly related to higher depreciation and amortization expense and costs associated with our cloud journey.

We generated over 600 basis points of trust fee operating leverage, nearly 800 basis points overall operating leverage and our expense to trust fee ratio improved by 100 basis points on a linked quarter basis to 113%. Turning to the full year's results on Page 16, trust fees were up 8% in 2024 due to both strong underlying markets and solid new business generation. We generated record NII, up 8% for the year, driven by sharply increasing deposits at the beginning of the year and stability over the remainder of the year, a healthy loan book and the multiple securities repositioning trades we completed. Total revenue on an FTE basis was up 22% for the full year and excluding notables, it was up 8%. Reported expenses were up 6.6% for the full year.

Excluding notables, they were up 6.1%, which includes the impact from our mid year decision to accelerate certain modernization and resiliency expenditures to offset a portion of the gains we realized from the Visa monetization. Turning to Page 17. Our capital levels and regulatory ratios remained strong in the quarter and we continue to operate at levels well above our required regulatory minima. Our common equity Tier 1 ratio under the standardized approach declined 20 basis points on a linked quarter basis to 12.4 percent as capital accretion was offset by a slight increase in RWA. Our Tier 1 leverage ratio was 8.1% flat with the prior quarter.

At quarter end, our unrealized pre tax loss on available for sale securities was $598,000,000 We returned $403,000,000 to common shareholders in the quarter through cash dividends of $149,000,000 and common stock repurchases of $254,000,000 And for the full year, we returned over $1,500,000,000 reflecting a payout ratio of 78%, including share repurchases of $938,000,000 our highest level in 5 years. We continue to expect our total operating expense growth to be at or below 5% for the full year, excluding notable items in both periods. Turning to NII, for the Q1, we expect NII to be approximately $555,000,000 to $575,000,000 This assumes the current market implied forward curve, a flattish balance sheet on a dollar adjusted basis with stable deposit levels, a relatively stable deposit mix, stable pricing and modest currency headwinds. For the full year, again, assuming the market implied forward curve, we're expecting NII to increase by low single digits on a percentage basis. And with that, operator, please open the line for questions.

Thank you. You. And our first question today comes from Glenn Schorr with Evercore.

Hi, thanks very much. Quick follow-up and thank you for the NII guide. I'm just curious on the durability of some of the underlying trends, meaning the 7% growth in non interest bearing deposits in the quarter, like was there some parking of cash by clients that naturally flows out? And then if you could just clarify, when you talked about made pricing decisions in line with market conditions, is that just rates came down and you lowered some deposit pricing on clients? Thanks.

Yes. Thanks for that question. I think, non interest bearing deposits were up over $1,000,000,000 I think that's probably higher than other quarters. And my guess would be that there's some seasonality to that number. And certainly, we welcome it.

But ultimately, it's not out of step with what we've seen in the past. In terms of the pricing adjustments, and we've talked about this before, really have put a lot of effort behind our overall liquidity management and balance sheet management as it relates to deposits. And so when we think about our pricing adjustments, it's more than just a normal course of business type of pricing adjustment. It's really taking a look at all the multiple currencies that we do manage on our deposit base and having a much more fulsome review of everything we're doing and making sure those betas are consistent with what we think they should be.

Okay. I appreciate it. The other one I want to talk on is alternatives were a big part of your objectives across each of the wealth asset management and asset servicing objectives. So my question is, A, are things accelerating? And then maybe you could talk about what is already built, what needs to be built?

And then I think we're all curious on some specifics like what product what asset classes are seeing the most demand in?

I'll take that. And you're right that Alternative Investment Solutions is something that cuts across each of the three businesses. And I think the way to think about it is instead of necessarily the businesses, but think about the solutions that we're providing. So from an investor perspective, whether that's our wealth clients and the segments within that or institutional clients, can we bring a broader set of solutions that we're clients, can we bring a broader set of solutions to them on this front for private market solutions. And so right now, we offer that through 50 South Capital, which is a part of our asset management business and that's in a largely a fund to fund structure.

We've seen great success with that. We raised over $1,000,000,000 that we closed on this year for that. So that's one of the solutions for a subset of the investors. But in addition to that, we also have a platform that has another private capital managers on it, so different funds. And at this point, to your point, it's built out if you will, but we think that we can offer more options on that platform.

So that's another way to build it out. And also when you talk about what needs to be done, we want to make sure that all of our portfolio managers are fully versed in the various types of private capital alternatives. And so you have, I'll call it that education and training part of it to make sure that that is in place. And then as I mentioned, institutional as well with our asset servicing business, not only can we offer it through the vehicles that I talked about there like 50 South, but also we can offer it in an advisory capacity. And so working with larger institutions that will then want us to provide advisory services on their the portion of their portfolio that's in alternatives.

So that's on the investor side. When you think about the private capital firms on that front, there's a lot that we can provide to them as well. Certainly capital call facilities, but also banking solutions for the entities themselves and then very much so on the administration front. And there I would say if you think about specific areas in Europe, for example, where semi liquids are growing at a very high rate, whether that's the structures that are in the UK like the long term asset funds or LTAFs or in Europe with a similar type structure, they're growing at a high rate and we have a very strong position in that, so providing services to the firms. And then finally, I would say also to the principles of these firms.

If we're working with them on the two fronts that I talked about there, we want to make them wealth management clients as well and have done that, but look to grow that part of the business as well.

And the next question will come from Brennan Hawken with UBS.

Good morning. Thanks for taking my question. Love to start out maybe a bit granular. In the past, you guys have spoken to targeting keeping the expense growth in 2025 at 5% or better. Dave, you had some comments that you made in a December industry conference where it seemed as though there was a little bit of uncertainty around that.

Could you maybe clarify, is that a reasonable level to expect for 2025? And if not, what are the variables that we should watch?

Yes. Thanks for that question. I was in the chair maybe a month and a half or 2 months when I was asked that question. And now that I've been in the chair for 4 months and have gone through our planning period for 25, I have very strong conviction around the 5% or below number. So let's take that issue off the table, if you will.

And obviously what we try to do is in putting that number out, we don't put it out in isolation. So our North Star is obviously what Mike talked about earlier, which is positive operating leverage. But at the end of the day, we know that the markets were pretty buoyant in 2024. We want to prepare ourselves to have a resilient business model. And the only way to do that is to keep driving expense curve down.

Got it. That's very clear. Thanks, Dave. And then taking a step back, you guys provided some good details here in your strategic update laying out the progress. But I'd like to maybe lay out a question that I get from investors a lot, which is the ROE targets.

Do you think that the ROE targets are ambitious enough? The lower end of the range doesn't really suggest a ton of improvement from recent levels. And why is it that we haven't seen those ROE targets move higher, particularly as we've seen maybe some of the growth rates begin to slow?

Yes. So we've had to your point the 10% to 15% range for some time. And that does cover different market environments and also different capital requirements as those regulations have changed over time. And then we've seen even in the past couple of years here where there was the expectation there was going to be more capital. Now we may be in a different environment where those requirements are not going to be as high.

So that's what it would take into account. To your question of why not higher per se, certainly we're driving to higher returns on capital, but we're also trying to drive to growth. And so if you just said, could you hit a higher ROE, you could, but you might be detracting from your ability to grow the business, which we think it's the combination that you want over time. And as I mentioned in my comments earlier, Brennan, we're certainly shooting for the top half of that range. And in fact, in this quarter, as you saw, we were over the top end of the range.

So it's not to say we're trying to constrict the returns. It's just saying we want the optimal combination between growth and returns.

And moving on to Betsy Graseck with Morgan Stanley.

During the prepared remarks, you were talking about how you've been able to get some of the expense improvements from asset servicing business line in addition to others obviously, but in the asset servicing piece, with some headcount reduction, if I heard you correctly. And the reason I'm asking the question is Northern Trust has a long history of excellent quality service, right? Service quality is the other North Star that you've got for yourselves, if I could borrow that phrase. And I'm wondering how have you been able to reduce headcount and keep that service quality high? In the past, it's been this friction point that's kept, I think, the organization from executing the kind of efficiencies that you're seeing now.

And could you help us understand what is it that you're doing differently that's enabling this headcount reduction while maintaining the service quality? Is it something to do with where technology is today? Is it the AI? Is it something totally different how you're organized? Thank you.

Let me start and then Dave may want to add. But Betsy, you're right and you can say that service quality is another North Star, if you will, for us because it is something that we look to differentiate ourselves. And to your point, what we're trying to do is maintain that, but also gain much greater efficiency in how we provide those services. And so just one thing I would say that we've done that's fundamentally different here is how we've organized our activities, how we've organized the company. And going back to kind of a little past midway in 2024 where we created the Chief Operating Officer role with Pete Cherowicz and moved the operations into that group.

That's so that we can gain much greater efficiency out of the operational aspect of that business. So we can get greater centralization, standardization, automation. And when we do that, our view is that will make those services better, that will get greater resiliency from doing that, but also just ease of use. And a lot of that does come with investments in technology to be able to do that. But we believe that it makes the business more scalable as well.

So that's the way we can, I believe, maintain both?

Okay. And how do you see the forward look here? How many more years of this do you feel that you have to be able to leverage this new structure?

Yes. I would say that it does take some time to gain the full benefits of what we're talking about here. So the way we've looked at some of the things we're doing here is these are, we say multi year, but that means kind of 2 to 3 years where you're really getting, I'll say, the greatest benefit. But then importantly, we're trying to set it up in such a way that it's sustainable as well. And so you continue to get additional benefits over time.

But you're right, you're going to capture more in the first kind of 2 to 3 years of it before it reaches that level.

And the next question will come from Ebrahim Poonwala with Bank of America.

Good morning. Good morning. I just wanted to follow-up on the global family office piece looking at the Slide 13. Just talk to us, it was a priority in 2024, I'm assuming it remains a bit area of focus. When we think about the revenue growth, whether or not that should be sort of leading the way going forward on a year over year basis, pretty strong growth in revenues within the GFO segment.

It sort of plateaued out over the last few quarters. If you can talk to how we should think about revenue growth within GFO given the investments you made, given just the secular growth in that segment would be helpful.

Sure. I'm happy to do that. What I would say is, GFO probably had its strongest year than it's ever had in terms of organic growth. It was exceptional, very high single digit organic growth. And we've also been reaching out more to international markets as well.

And so from that perspective, it was a great year. Also keep in mind that our assets under management in the Q4 were up 5%. And I think there is a lag effect there, right? So depending on when you bring that business in, you'll see it in your numbers. And so there's that issue as well.

So I wouldn't say that it actually has plateaued. What I would tell you is the pipeline looks the GFO pipeline actually looks more robust going into 2025 than it did in 2024.

Understood. And maybe just a separate question. So heard you on the NII guide. How should we think about the gearing of the balance sheet? 1, do you think we'll be at a point where if the Fed were not to do anything rates stay more or less the same, NII and deposit balances should grow from here all else equal?

Yes. I mean, we're still anticipating a certain number of rate cuts, at least a couple this year in the U. S. And then globally, there's a lot of other potential rate cuts that are in our numbers as well. Keep in mind, our deposits aren't all in dollars.

So we obviously did some pricing adjustments, which help on the NII front as well. We also have a pickup in loan activity, which we think it could continue into next year. So there's a lot of different puts and takes when you get into the NII number apart from just the various cuts in interest rate cycles.

But rate cuts alone, would that be incrementally positive or negative given the bad balance sheet mix?

Well, we think obviously if there are less rate cuts that's better.

And moving on to Alex Blostein with Goldman Sachs.

Hey, Mike. Hi, Dave. Good morning, everybody. I wanted to ask you guys a question around expenses again. So I heard you loud and clear on the at or below the 5% number.

I guess in the past, the revenue base or rather the expense base, sorry, used to flex a little bit more up and down with revenues. So I just want to understand a little better, has that changed at all, meaning that if you are in a sort of better fee environment in 2025 versus where you're contemplating, are you still kind of committing to the 5% as the upper end of that? And maybe a better way to ultimately calibrate this is to talk about the expense to fee ratio that you expect for the full year 2025?

Yes. So I'll start on that, Alex. And to your point, there's always going to be a relationship between the expenses and the revenues, even with the market impact or rate impact, I'll call it on NII and even the capital markets activities. So just take capital markets as an example because we don't talk about that as much. We had a lot of success with capital markets this year and saw double digit growth on the revenue side.

There are certain expenses that come with that. If you think about just clearing expenses and things like that. The same thing with asset management, where depending on how the asset management products are distributed, there are some costs that go with that as well. And so we had again successful year with asset management, capital markets, both of those very scalable products for us, which is good, but there is going to be some expense that comes with the additional growth. So that's just then I'll call it the relationships that there.

That said, we believe that we're trying to get less of that flex, if you will. And so if you look at the Q4 here, obviously, strong revenues and expenses still at a level that's higher than we think it should be and that what we're aiming for, but it created a significant amount of operating leverage on that front. Now as the revenue growth goes down, that's where we have to push that down faster and harder. So we're trying to hold it down even when revenues are more robust and then when it's much tighter, ensuring that we keep them much more under control.

Got you. Yes, I know that all makes sense. And like obviously, ultimately higher revenue comes with higher expenses and that's a high cost problem. But I guess as you think about the expense to fee ratio, which would kind of normalize for that flex, so to speak, what do you guys are aiming for, for 2025?

Yes. So without putting a pin in on a number for 2025, definitely looking for positive fee operating leverage, which would drive that down. We're at 115 for the year. We're at 113 for the quarter. So you can see the trajectory.

And the reason why we use that ratio, as you know, Alex, is because that essentially is trying to say, how do we take some of that flex out of the financial model, if you will. And so we've identified the 105 to 110 as a level that says that's the right level of efficiency that we're able to maintain in providing those services and having them at the right level of service, but also to the extent that you do see revenues come down, your expenses are not too high, if you will. And therefore, you've essentially taken some of that again flex out of it on the downside. So no specific target for this year other than continued progress into that range.

Got it. Okay. That's perfect. Thank you guys.

And our next question comes from David Smith with Truist Securities.

Good morning. Your capital levels are still pretty elevated versus your closest peers at 12.4 percent CET1. Can you talk about how you expect to use your capital in the near term and where you might want to bring your capital levels to over the next year or so?

Sure. So I would agree, we have very strong capital levels right now and that's a result of both the strong income generation, but also the benefit of the Visa gain that we had earlier this year. That's enabled us to repurchase stock at a higher level. And that's how we think about that lever is the share repurchases can flex up and down depending on our capital levels. So we would expect as we go into 2025 to continue at this pace.

We're, as I mentioned, very comfortable at the current capital levels, but also would be comfortable moving them down somewhat. We have a target range to be above some of our closest peers when it comes to capital, but the level that we're at right now is very comfortable and gives us the room to be able to do more. Dave mentioned for this year, if you exclude the notables, our total payout ratio was in the area of about 78%. We would expect to be at that level or higher as we go into 2025.

Thank you. And then separately on NII, if I just take the midpoints of your 1Q and full year NII guides, it would suggest NII staying pretty consistent throughout the year, at least on average. Is there anything that we should be considering in terms of the cadence there across the cuts in the forward curve as well as your expectations for loan growth or balance sheet shifts?

Yes. I mean one thing to keep in mind with us as it relates to NII is that we are a very liability driven institution. And so and that's why to Mike's points about capital, that's why we keep this excess capital. And so for example, we saw a very large pickup in our loan activity over the last quarter. And so we want to make sure our balance sheet is there for our clients.

Northern Trust (NTRS) Q4 2024 Earnings Call Transcript

Company Participants