Quick Take on 2Q26 Earnings Result: Solid Beat, But In-Line Guide Disappointed

Research evidence excerpt

Quick Take on 2Q26 Earnings Result: Solid Beat, But In-Line Guide Disappointed

Update

July 22, 2026 08:08 PM GMT

Morgan Stanley & Co. LLCMNorthern Trust Corp. | North America Manan Gosalia

Equity Analyst

Quick Take on 2Q26 Earnings Manan.Gosalia@morganstanley.comConnell J Schmitz +1 212 761-4092

Research Associate

Connell.Schmitz@morganstanley.com +1 212 761-6252

Result: Solid Beat, But In-Line

Northern Trust Corp. (NTRS.O, NTRS US)

Large Cap Banks | United States of AmericaGuide Disappointed

Stock Rating Underweight

Industry View Attractive

What’s Changed Price target $173.00

Northern Trust Corp. (NTRS.O) From To Shr price, close (Jul 21, 2026) $185.06

Mkt cap, curr (mm) $34,023

Price Target $170.00 $173.00

52-Week Range $191.60-118.99

AlphaSignals Earnings Reaction

Unchanged Modest upside Modest revision higher

Impact to our thesis Financial results versus consensus Direction of next 12-month

consensus EPS

Source: Company data, Morgan Stanley Research

Stock underperforming despite 10% EPS beat on strong

operating leverage, as expectations were elevated post peer

earnings, with in-line FY guide (implying weaker 2H growth) and

capital return messaging (incl. discussion of inorganic growth)

negatively impacting sentiment.

Above-peer operating leverage drove 10% EPS beat.

• Northern delivered an 8th consecutive quarter of y/y positive operating

leverage (and organic fee growth) on NII +11%, fees +13%, and expenses +5%

y/y.

• 2Q's 717 bps of operating leverage was above peers STT/BNY at 645/606 bps

respectively.

• NII beat was largely driven by stronger NIM, helped by NIB balances

surprising higher at up +4% q/q and the roll-off of certain institutional

deposits with thin margin.

• FX trading was biggest driver to fee beat, similar to peers; expect this line