Trust Banks 2Q26 Preview: Strong Fee Outlook Led By Equity Markets; Bodes Well For 3Q & FY26, Continued Near Term Outperformance

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Trust Banks 2Q26 Preview: Strong Fee Outlook Led By Equity Markets; Bodes Well For 3Q & FY26, Continued Near Term Outperformance

tion based on a increased EPS. We expect State Street to benefit relatively more near term in

specific catalyst. As such, it can differ from its outlook due to its business mix with greater exposure to equities AUM and

the analysts’ published ratings, which are AUC/A, tempered by decline in F/X volatility. We place State Street on

positive catalyst watch into 2Q26 earnings. Next would be Northern Trust relative to their coverage universe and six

where EPS would also benefit from usage of its Visa share sale gain. Trust bank to 12 months in duration.

valuations are above long term averages: BNY at 15.0x ‘27 consensus EPS vs.

10.9x long-term average, Northern Trust at 14.5x vs. 13.7x average, and State

Street at 11.9x vs. 10.1x average.

• Medium term, the trust banks are likely to be impacted by different

factors. The servicing business is likely to see continued pricing compression,

but tempered by benefits from automation and AI. State Street remains the most

driven by the servicing business among peers, but surprisingly has lost some

business with major clients a couple of times over the past year, which raises

questions about its operations. Northern Trust seems to have pulled back some

from competing as actively in servicing and is letting some business go that

does not meet its margin hurdle in favor of focusing more on Wealth

Management. BNY continues to benefit from its diversified businesses that

have high margins while Investment and Wealth Management remains the

laggard.

• Servicing and asset management fees plus wealth management fees should

benefit in 2Q from very strong markets in valuation and strong volumes,