Northern Trust Raises Dividend as Net Interest Income Climbs
The custody-and-asset-management franchise reported a 1.81% net interest margin and a 10% increase to its quarterly dividend.
Net interest income for Northern Trust (NTRS) rose 3% quarter-over-quarter to $683.1 million. The increase, which represented an 11% rise compared to the same period last year, followed a favorable shift in deposit mix and lower funding costs.
Net interest margin expanded 6 bps from the prior quarter to 1.81%. This margin, up 12 bps year-over-year, was primarily driven by the reduction in funding costs. Average loans grew 2% quarter-over-quarter to $41,567.6 million. Average deposits decreased 1% sequentially to $127,845.7 million, though they remained 4% higher than the prior year.
Fee income saw a lift from securities lending, where fees rose 26% quarter-over-quarter and 46% year-over-year on the back of higher volumes and spreads. Total trust, investment, and other servicing fees increased 1% sequentially to $1,349.5 million.
Noninterest expense rose 9% quarter-over-quarter to $1,638.6 million. The increase included $61.5 million in software dispositions and $51.0 million in severance charges.
Credit quality improved across commercial real estate and commercial and industrial portfolios. The bank recorded a negative provision for credit losses of $5.3 million in the second quarter, compared to a positive provision of $16.5 million in the second quarter of 2025.
The Common Equity Tier 1 ratio increased 20 bps from the prior quarter to 12.2%. The Board of Directors approved a $0.08 increase to the quarterly dividend on July 21, 2026, representing a 10% raise. Northern Trust returned over $1 billion to shareholders during the first half of the year.
Return on average common equity rose to 25.9% for the quarter, compared to 17.4% in the first quarter and 14.2% in the second quarter of 2025.