Northern Trust Corp.

The stable outlook incorporates S&P Global Ratings' view that the company will maintain strong financial performance, a conservative business strategy, and strong loan performance over the next two years. We also expect deposit outflows and net interest margin pressures to abate and think the company will continue to prudently manage its liquidity and interest rate sensitivity amid potentially higher interest-rate volatility. We think the company is better positioned through credit cycles than most banks because of its relatively high proportion of fee-based revenue, relatively low lending exposures, and conservative financial policies. We could lower the ratings if asset quality deteriorated meaningfully or if operational losses became significant. We could also lower the ratings if global equity and fixed-income market valuations

...We think Northern Trust Corp. will continue to benefit from its well-established market positions, consistent earnings generation, and conservative business and financial policies. The company has a solid market position in its asset servicing business and strong customer relationships in its wealth management segment. We think revenue and earnings have been relatively resilient, despite substantial volatility in asset valuations and interest rates in recent years. We also view the company's very high proportion of noninterest income (typically more than 70% of revenue) and conservative business and financial strategies as credit positives. The bank maintains a substantial portion of its earning assets in liquid securities, cash, and deposits, which we think aligns well with what we view as less stable deposit funding. Deposit outflows have been meaningful over the past year. We think these deposit outflows and the company's very high proportion of uninsured and foreign office deposits...

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