Northern Trust Decreases Prime Rate

Rhea-AI Summary

Northern Trust (NTRS) has announced a reduction in its prime rate, lowering it from 7.75% to 7.50%. The new rate will take effect on Thursday, December 19, 2024.

Positive

• 25 basis points reduction in prime rate indicates potential lower borrowing costs for customers

Negative

• Lower prime rate may reduce interest income and potentially impact profit margins

Insights

Interest Rate Specialist

The 25 basis point reduction in Northern Trust's prime rate reflects a direct response to the Federal Reserve's recent dovish pivot and signals broader implications for the banking sector. This move, lowering the rate to 7.50%, will impact Northern Trust's net interest income and margin dynamics. The rate decrease affects various lending products tied to the prime rate, including business loans, credit lines and certain consumer credit products.

The timing aligns with market expectations of multiple Fed rate cuts in 2024, potentially marking the beginning of a broader easing cycle. For Northern Trust, whose revenue is significantly tied to net interest income, this adjustment could create near-term pressure on earnings. However, the lower rates may stimulate loan demand and asset management fees through increased market activity. Historical data suggests that initial rate cuts in an easing cycle often lead to expanded lending volumes, potentially offsetting some margin compression.

The reduction's impact extends beyond direct lending - it affects Northern Trust's wealth management and custody businesses, where lower rates typically boost asset valuations but compress cash management yields. This strategic move positions the bank for the anticipated lower-rate environment while maintaining competitive positioning in key market segments.

CHICAGO--(BUSINESS WIRE)-- Northern Trust has decreased its prime rate from 7.75% to 7.50%, effective Thursday, December 19, 2024.

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 September 30, 2024, Northern Trust had assets under custody/administration of US$17.4 trillion, and assets under management of US$1.6 trillion. For more than 135 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 Instagram @northerntrustcompany or Northern Trust 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/20241218993936/en/

Media Contact:

Doug Holt

Northern Trust

(312) 557-1571

Doug.Holt@ntrs.com

http://www.northerntrust.com

Source: Northern Trust Corporation

FAQ

What is Northern Trust's (NTRS) new prime rate as of December 19, 2024?

Northern Trust's new prime rate will be 7.50%, effective December 19, 2024, reduced from the previous rate of 7.75%.

How much did Northern Trust (NTRS) decrease its prime rate in December 2024?

Northern Trust decreased its prime rate by 25 basis points (0.25%), from 7.75% to 7.50%.

When will Northern Trust's (NTRS) new prime rate take effect?

Northern Trust's new prime rate of 7.50% will take effect on Thursday, December 19, 2024.

How will Northern Trust's (NTRS) prime rate decrease affect borrowers?

The decrease in prime rate to 7.50% will generally result in lower borrowing costs for customers with loans tied to Northern Trust's prime rate.