Northern Trust Corp. - 4.70% PRF PERPETUAL USD 25 - DpSh Rp1/1000th Sr E

Strong Q3 performance with broad-based growth & operating leverage - Net income: $642.9M, EPS $3.40, ROE (avg common): 20.1% - Pre-tax income: $804.2M, pre-tax margin 34.9% - Revenue (ex-notable items): +11% YoY driven by Trust fees +8%, Net interest income (NII) +14%, and Capital markets revenues +38% - Expenses +5% YoY → 600+ bps positive operating leverage - Capital markets + strong FX activity was a major contributor even though the CEO noted macro is “constructive but evolving.”

Capital, payouts, and buyback remained robust - Returned >$500M in Q3 and >$1.5B year-to-date - Q3 dividends + repurchases: $161.9M dividends and $352.3M buybacks - Payout ratio: ~82% on a reported basis (~87% excluding notable items) - CET1: 12.4% (above required minimums); Tier 1 leverage: 7.8% - Dividend coverage priority: management emphasized dividend → growth funding → buybacks when excess capital exists. - Surprise: CFO announced plans to retire (staying through Q1 next year to ensure a smooth transition).

Guidance/outlook: constructive but with seasonality + market assumptions - Assuming stable market environment and interest-rate backdrop, they now expect: - Q4 NII: +8% to +9% YoY - Q4 total revenue: +6% to +7% - Full-year: 500 bps+ operating leverage (and positive operating leverage in Q4) - Tax rate expectation: effective tax rate expected to rise to ~25% in Q4 and going forward (down sharply in Q3 due to international tax credit utilization assumptions).