Northern Trust Corporation announces 2024 Stress Capital Buffer

Rhea-AI Summary

Northern Trust announced the Federal Reserve's 2024 Comprehensive Capital Analysis and Review (CCAR) results, indicating a 2.5% Stress Capital Buffer (SCB), unchanged from the current level. This SCB will be effective from October 1, 2024, to September 30, 2025, ensuring a minimum common equity tier 1 (CET1) ratio of 7%. CEO Michael O’Grady emphasized the strength of Northern Trust's capital position and business model. Northern Trust plans to maintain its quarterly cash dividend of $0.75 per share, subject to board approval, and will evaluate potential stock repurchases based on its strong capital position and market conditions.

Positive

• The 2024 Stress Capital Buffer (SCB) remains unchanged at 2.5%, indicating stability.
• Northern Trust maintains a strong capital position with a minimum common equity tier 1 (CET1) ratio of 7%.
• The company plans to continue its quarterly cash dividend of $0.75 per share.

Negative

• None.

Insights

Financial Analyst

The announcement by Northern Trust Corporation regarding the Federal Reserve's 2024 Comprehensive Capital Analysis and Review (CCAR) results is highly relevant for investors. The confirmation of a 2.5 percent stress capital buffer (SCB), which remains unchanged, indicates that Northern Trust is maintaining a stable financial position. This is particularly significant in the banking sector where capital buffers are a critical measure of resilience against economic downturns.

The maintenance of a minimum common equity tier 1 (CET1) ratio of 7 percent suggests that Northern Trust is well-capitalized, adhering to regulatory requirements. This stability can reassure investors about the company's ability to handle financial stress.

From an investor's perspective, the commitment to continue quarterly cash dividends of 0.75 per share highlights Northern Trust's capability to generate steady returns for shareholders. Additionally, the cautious approach towards stock repurchases signals prudent capital management, balancing growth and shareholder returns.

While the news is positive, it's essential to consider the broader market conditions and potential future regulatory changes that could impact Northern Trust's financial strategies. For now, the consistency in SCB and CET1 ratios underlines a robust capital framework, offering a favorable outlook for both short-term and long-term investors.

Market Research Analyst

The results of the Federal Reserve's stress tests are a barometer of a bank’s financial health and stability. Northern Trust’s ability to maintain a 2.5 percent SCB speaks to its solid capital foundation and effective risk management practices. This stability can enhance investor confidence, especially in a volatile economic environment where financial institutions are under scrutiny.

Investors should note Northern Trust's strategy to retain strong capital levels, invest in its franchise and return excess capital to shareholders. These priorities not only ensure business sustainability but also project a commitment to shareholder value. By keeping the quarterly cash dividend at 0.75 per share, Northern Trust is sending a clear message of financial strength and reliability.

However, it's important for investors to keep an eye on future developments and the company's ability to maintain this capital strength amidst shifting economic landscapes. The ability to withstand adverse conditions highlighted by the stress test results provides a level of security for those invested in the bank's shares.

Overall, the news reinforces a sense of security and stability, which is paramount for investors in the banking sector, ensuring that Northern Trust remains a dependable investment option.

CHICAGO--(BUSINESS WIRE)-- Northern Trust Corporation today commented on the results of the Federal Reserve’s 2024 Comprehensive Capital Analysis and Review (CCAR).

Based on the 2024 CCAR results, Northern Trust will be subject to a preliminary stress capital buffer (SCB) of 2.5 percent, which is the minimum SCB requirement under the applicable regulation and unchanged from the current level. The SCB will be effective from October 1, 2024, to September 30, 2025, and will equate to a minimum common equity tier 1 (CET1) ratio of 7 percent.

“The Federal Reserve’s annual CCAR stress test results once again confirmed the strength of our capital position and business model as well as our ability to withstand a variety of adverse circumstances,” Chairman and Chief Executive Officer Michael O’Grady said. “Our capital deployment priorities remain unchanged – we will continue to maintain robust capital levels, invest in our franchise, and return excess capital to shareholders.”

Northern Trust intends to maintain its quarterly cash dividend on common stock of $0.75 per share, subject to approval by its board of directors, and will continue to take an opportunistic, considerate approach in its evaluation of potential common stock repurchases given its strong capital position, prevailing market conditions, and other factors.

About Northern Trust

Northern Trust Corporation (Nasdaq: NTRS) is a leading provider of wealth management, asset servicing, asset management and banking to corporations, institutions, affluent families and individuals. Founded in Chicago in 1889, Northern Trust has a global presence with offices in 24 U.S. states and Washington, D.C., and across 22 locations in Canada, Europe, the Middle East and the Asia-Pacific region. As of March 31, 2024, Northern Trust had assets under custody/administration of US$16.5 trillion, and assets under management of US$1.5 trillion. For more than 130 years, Northern Trust has earned distinction as an industry leader for exceptional service, financial expertise, integrity and innovation. Visit us on northerntrust.com. Follow us on X (formerly Twitter) @NorthernTrust or Northern Trust Corporation on LinkedIn.

Northern Trust Corporation, Head Office: 50 South La Salle Street, Chicago, Illinois 60603 U.S.A., incorporated with limited liability in the U.S. Global legal and regulatory information can be found at https://www.northerntrust.com/terms-and-conditions.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240628229117/en/

Doug Holt

Northern Trust

(312) 557-1571

Doug.Holt@ntrs.com

Source: Northern Trust Corporation

FAQ

What is Northern Trust's SCB for 2024?

Northern Trust's Stress Capital Buffer (SCB) for 2024 is 2.5%, unchanged from the current level.

When will Northern Trust's 2024 SCB be effective?

The 2024 SCB for Northern Trust will be effective from October 1, 2024, to September 30, 2025.

What is Northern Trust's minimum CET1 ratio for 2024?

Northern Trust's minimum common equity tier 1 (CET1) ratio for 2024 is 7%.

Will Northern Trust continue its quarterly cash dividend?

Yes, Northern Trust intends to maintain its quarterly cash dividend of $0.75 per share, subject to board approval.

Is Northern Trust considering stock repurchases in 2024?

Northern Trust will take an opportunistic and considerate approach in evaluating potential common stock repurchases based on its strong capital position and market conditions.