Northern Trust faces market risk from fluctuating interest rates, impacting net interest income and the market value of equity. Credit risk exists in loans, with potential losses from defaults, especially in commercial and institutional lending. Litigation and regulatory proceedings, including a recent French court case, pose potential financial losses. Uncertainties in the resolution of the Visa litigation and related swap agreements also present risk. The document also highlights liquidity risk, the potential for insufficient funds to meet obligations.
Financial Upside
Strong net income growth is reported, with a 42% increase in the current quarter and a 59% increase in the nine-month period. Favorable market conditions, including higher client deposits and securities repositioning, are driving net interest income growth. Increased trust, investment, and other servicing fees, along with gains from the sale of equity investments, contribute to the positive revenue trend. The company's capital ratios remain strong, exceeding regulatory requirements.
