Northern Trust (NTRS) Morgan Stanley US Financials, Payments & CRE Conference 2024 summary

Wealth management strategy and client focus

• Wealth management represents nearly 40% of revenues, with AUM growing 6-8% CAGR over 5-10 years, and family office as the fastest-growing segment.

• Performance is measured primarily against peers, focusing on trust fees, revenue growth, net interest income, expenses, asset accumulation, and client satisfaction.

• Client base spans affluent families, with a focus on those with high financial complexity, typically $30M-$100M+ in assets.

• Client acquisition is driven by word-of-mouth, centers of influence, and increasingly digital marketing, even among ultra-high-net-worth clients.

• Growth opportunities include global family office, ultra-high-net-worth, workplace services, and emerging "virtual markets" without physical offices.

Competitive landscape and operational challenges

• Competition in wealth management is intensifying, requiring constant monitoring and adaptation.

• Technology and evolving client expectations for digital services are driving changes, such as cashless offices and enhanced digital functionality.

• The firm maintains a fiduciary standard, keeping wealth and asset management separate, but is strengthening collaboration for client-focused product development.

Financial outlook and capital management

• No changes to financial guidance since April; business trends are in line with expectations.

• Deposits have stabilized after previous declines, and the shift from non-interest to interest-bearing accounts has largely flattened.

• The conversion and sale of Visa B shares is boosting capital, with proceeds used to strengthen equity and potentially accelerate share repurchases.

• Capital levels remain well above regulatory minimums, supporting client confidence and future growth, with share repurchases likely to increase but not dramatically.

• Stress Capital Buffer (SCB) is expected to remain unchanged, and expense growth is targeted at 5% or better for the year, with positive operating leverage from market-driven revenue increases.