Northern Trust Corp Q3 2025 Earnings Call Summary

The following is excerpted from the question-and-answer section of the transcript.

Question: Ebrahim Poonawala - Bofa Merrill Lynch Asset Holdings Inc - Analyst : I guess maybe just first, Dave, where you ended on the NII outlook, the mid- to high. Maybe address it two ways, if you could. One, on the deposit trends, it felt like the runoff was more than we expected. What are you seeing in terms of growth outlook and the mix shift in deposits going forward? And how should we think about the asset sensitivity of the balance sheet? If the Fed were to cut 3 times or 4 times in quick succession, does that put negative pressure on the NII as we think about the first half of next year?

Question: Ebrahim Poonawala - Bofa Merrill Lynch Asset Holdings Inc - Analyst : Got it. That's helpful. And I'm not sure if I caught this in your prepared remarks when talking about -- when you're going to sort of Wealth Management and you talked about some of the challenges at the investment product level. I was wondering if you could just kind of elaborate on what the issues were on that front? And sort of what are the actions you're taking to kind of get that back on track?

Question: Kenneth Usdin - Autonomous Research - Analyst : Just wanted to ask you to talk a little bit about just some of the moving pieces of this quarter. I know it might just be temporary, but AUC/A up 1%. I know you're talking about new business wins. You said also in the press release some outflow. So is that just kind of the normal state of kind of getting some wins and some losses every quarter, just odd dynamic for this quarter that you saw just relative to the market strength that we saw? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 22, 2025 / 1:00PM, NTRS.OQ - Q3 2025 Northern Trust Corp Earnings Call

Question: Kenneth Usdin - Autonomous Research - Analyst : Great. That's really great, helpful, Dave. Second point, you're obviously firmly committed to that sub-5%. We saw it again this quarter. And just as you're starting to think about looking forward, I know you've said that you're strongly committed to inclusive of FX translation. I just -- any incremental thing we should think about that as we go forward? Just I know you're going to be thinking about positive operating leverage. We don't know what the markets will do from here. They've obviously been a big helper. But as you continue to kind of hone that messaging around the expense base, any new thoughts about where you can kind of try to hold that level on expense growth overall?

Question: Brennan Hawken - Bank of Montreal - Analyst : Mike, I'd love to drill into a comment that you made in your prepared remarks where you talked about sort of allowing more marginal business to roll off. I mean, you spoke to that aiding growth. Is that growth comment like an indication that it's going to be more about profit growth than top line growth? Do you expect that some of these efforts might result in more of a top line headwind, but you're going to be able to make it up for it in the sort of better unit economics on each of the new businesses that you're focused on? Can you help me maybe think through some of that?

Question: Brennan Hawken - Bank of Montreal - Analyst : Great. And then there was a lot of movement in the markets. You already spoke a bit to GFO and some of the changes that happened within some portfolios. But we did see fee rates, at least the way we're able to calculate them, and I know that that's sort of flawed given how you guys bill because we don't have intra-quarter visibility, but did you guys see fee rate pressure in some of the other businesses this quarter as well? Or was it just around the math in how you bill and how much the markets moved? If you could help maybe disentangle that a bit.

Question: Brennan Hawken - Bank of Montreal - Analyst : Dave, I'm sorry. I'm sorry, I probably worded my question poorly. I was looking at the businesses aside from GFO. Like I get that GFO had some of those moves, I mean, like in the servicing business and the investment management business. We saw a little fee rate pressure there, too. So I was just curious about whether that was just the math in markets or whether there was actually some -- you guys experienced some fee rate pressure.

Question: Mike Mayo - Wells Fargo Securities LLC - Analyst : I just want to make sure I understand the big picture correctly. So I think you're running Asset Management and Wealth and especially GFO for growth and you're running Asset Servicing relatively more for profitability. And to get there, you're letting some low-margin business runoff. Did I get that correctly?

Question: Mike Mayo - Wells Fargo Securities LLC - Analyst : Okay. So I guess the question is, under what circumstances would you say, you know what, the custody business, maybe you should downsize even more or disinvest? And I know this is an old question. You usually said, look, you might not have scale in absolute terms, but you have scale where you want to compete. I think that's kind of where you've been. But does that still hold? And under what circumstances would that change? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 22, 2025 / 1:00PM, NTRS.OQ - Q3 2025 Northern Trust Corp Earnings Call

Question: Mike Mayo - Wells Fargo Securities LLC - Analyst : And then last follow-up. The one liner why someone of your size can compete with the Goliaths of the industry. I mean it's always skill versus scale, the argument. Why can you win in tech and AI but you don't spend as much money?

Question: David Smith - Truist Securities Inc - Analyst : Is there any more color you can offer on the relative strength in FX trading and securities commissions and what you've been doing to drive this? You mentioned some initiatives to drive growth here. I wonder if you could just kind of help us frame how much of the strength do you feel like is a result of share gains and other things that are more the result of things that were in your control as opposed to just simply benefiting from broader market volumes being healthy.

Question: Gerard Cassidy - RBC Capital Markets Inc - Analyst : Dave, Mike, kind of different questions for you guys. And I always like to get the perspective from folks like you because you don't have a big exposure to this area. There's been a lot of talk this quarter about loans to non-depository financial institutions. And of course, in the top 20 banks, you're at the lowest. You've got the least amount of exposure. Can you give us some color on what -- and I'm not asking you to talk about other banks, but these categories that are within this NDFI, whether it's private equity or mortgage, credit intermediaries, etc, how do you guys look at that NDFI category?

Question: Gerard Cassidy - RBC Capital Markets Inc - Analyst : And as a follow-up question, the IMF has come out as well as the Bank of England with reports in the last couple of weeks citing, and I hate to use the word bubble, but really inflated in asset prices. And they point out that we've got to be careful of some maybe REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 22, 2025 / 1:00PM, NTRS.OQ - Q3 2025 Northern Trust Corp Earnings Call serious corrections. Obviously, when you look at your Wealth Management business, it's not all equities. You've got fixed income and cash in them. Can you share with us how you guys approach managing Wealth Management should a big correct to come? Or just your view on how you approach it with your clients?