N O R T H E R N T R U S T C O R P O R A T I O N © 2012 Northern Trust Corporation The Langham Hotel, Boston November 2, 2012 Michael G. O’Grady Steven L. Fradkin Executive Vice President President, Corporate & Chief Financial Officer & Institutional Services BancAnalysts Association of Boston 31 st Annual Bank Conference: “Operating in a Suboptimal Environment” EXHIBIT 99.1 Service Expertise Integrity |
BancAnalysts Association of Boston: 31 Annual Bank Conference st 2 Forward Looking Statement This presentation may include forward-looking statements such as statements that relate to Northern Trust’s financial goals, capital adequacy, dividend policy, expansion and business development plans, risk management policies, anticipated expense levels and projected profit improvements, business prospects and positioning with respect to market, demographic and pricing trends, strategic initiatives, re-engineering and outsourcing activities, new business results and outlook, changes in securities market prices, credit quality including reserve levels, planned capital expenditures and technology spending, anticipated tax benefits and expenses, and the effects of any extraordinary events and various other matters (including developments with respect to litigation, other contingent liabilities and obligations, and regulation involving Northern Trust and changes in accounting policies, standards and interpretations) on Northern Trust’s business and results. These statements speak of Northern Trust’s plans, goals, targets, strategies, beliefs, and expectations, and refer to estimates or use similar terms. Actual results could differ materially from those indicated by these statements because the realization of those results is subject to many risks and uncertainties. Our 2011 annual report and periodic reports to the SEC contain information about specific factors that could cause actual results to differ, and you are urged to read them. Northern Trust disclaims any continuing accuracy of the information provided in this presentation after today. |
3 A Highly Focused Business Model As of September 30, 2012 Founded in 1889, Northern Trust Corporation is a global leader in asset servicing, asset management, wealth management and banking for personal and institutional clients. Personal Financial Services Corporate & Institutional Services Northern Trust Global Investments Operations & Technology Pension funds Fund managers Insurance Foundations Endowments Sovereign wealth funds Individuals Families Family offices Family foundations & endowments Privately held businesses BancAnalysts Association of Boston: 31 st Annual Bank Conference Leading advisor to affluent market AUM $184 Billion AUC $429 Billion Leading global custodian AUC $4.3 Trillion AUM $566 Billion Leading asset manager for personal & institutional clients AUM $750 Billion Integrated global operating platform Serving personal and institutional clients $1.6 Billion in technology spending 2009-2011 |
BancAnalysts Association of Boston: 31 Annual Bank Conference st 4 Comprehensive investment capabilities Custom asset allocation Broad menu of outside managers Brokerage services Investment Management Personal Financial Services Comprehensive Approach to Serving the Affluent Market PFS Assets Under Management ($ Billions) CAGR +6% S&P 500 CAGR +2% Private and Business Banking Deposit services Custom financing Stock option lending Foundation and Institutional Advisors Customized investment objectives and strategic asset allocation Manager selection and oversight Asset servicing and administration Advisory Services Family education and governance Family business Non-financial asset management Financial Planning Cash flow analysis Debt management Tax planning Retirement planning Trust & Estate Services Wealth transfer planning Trust and estate services Philanthropic advisory services Securities custody $94 $88 $104 $110 $117 $135 $148 $132 $145 $154 $174 $184 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 3Q 2012 |
5 BancAnalysts Association of Boston: 31 Annual Bank Conference st Northern Trust Global Investments Client Focused, Diversified Investment Manager As of September 30, 2012 Providing diversified asset management solutions, with total assets under management of $750 billion across… Asset Classes Equities $354 Billion (47%) Fixed Income $146 Billion (19%) Short Duration $229 Billion (31%) Other $21 Billion (3%) Client Segments $566 Billion Institutional $184 Billion Personal Styles $37 Billion (5%) $348 Billion (46%) Active $344 Billion (46%) Index Multi-Manager Other $21 Billion (3%) Separate Accounts Mutual & Commingled Funds Exchange Traded Funds (ETF) Delivered through Various Structures |
BancAnalysts Association of Boston: 31 Annual Bank Conference st 6 1 Trust Fees exclude securities lending fees 2 2007-2010 fees exclude the impacts of one mark-to-market Securities Lending collateral fund Total Revenue CAGR: +2% Net Interest Income -3% Trust Fees 1 +10% Foreign Exchange -27% $ Millions Securities Lending 2 -16% Strong Trust Fee Growth Tempered by Headwinds CAGRs: |
BancAnalysts Association of Boston: 31 Annual Bank Conference st 7 Impact of the Environment on Profitability and Returns Revenue pressures have led to declining margins and returns Efforts are underway to improve profitability in 2012 and beyond – a program we call “Driving Performance” Return on Equity Pre-tax Margin As of September 30, 2012 26.3% 33.1% 9.5% 8.6% 10.1% 12.7% YTD 2012 2011 2010 2009 |
BancAnalysts Association of Boston: 31 Annual Bank Conference st 8 Process Optimization Streamline major business processes Optimize operational footprint Apply best-in-class procurement practices Refine service delivery model Migrate IT resourcing mix Rationalize overlapping applications Manage internal end-user demand Technology Efficiency Corporate-wide Initiatives Simplify organizational structure Align retirement plans with market Rationalize real estate Consolidate banking charters Fully align value proposition Unbundle pricing structures Expand share of relationship Revenue Enhancements 30 – 35% 30 – 40% 5 – 10% 20 – 25% $250 million Percent of 2013 Impact Driving Performance: Improving Profitability and Returns More than $100MM in pre-tax income improvement has been achieved year-to-date. We are on track to achieve our 2012 and 2013 targets. |
BancAnalysts Association of Boston: 31 Annual Bank Conference st 9 C&IS Assets Under Custody ($ Trillions) Corporate & Institutional Services Delivering a Broad Range of Solutions CAGR +10% S&P 500 CAGR +2% US$ EAFE CAGR +2% Asset Administration Fund accounting Transfer agency Corporate secretarial/trustee Valuations Investment operations outsourcing Investment Management Active Global index Investment outsourcing Liability driven investing Multi-manager Transition management Asset Processing Safekeeping Settlement Derivatives and collateral processing Income collection Corporate actions Tax reclamation White label reporting Valuation analytics Performance analytics Risk monitoring and reporting Trade execution analysis Asset Reporting Asset Enhancement Cross-border pooling Trade execution Cash management Securities lending Foreign exchange $1.5 $1.3 $1.9 $2.3 $2.7 $3.3 $3.8 $2.7 $3.3 $3.7 $3.9 $4.3 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 3Q 2012 |
BancAnalysts Association of Boston: 31 Annual Bank Conference st 10 ETFs $3 Alternatives $8 Sovereign Wealth Funds $16 $23 $28 $36 Sources: Cerulli, Investment Company Institute, CEA, Blackrock, The City UK, Internal Estimates Americas Asia Pacific 2012E $114 2016E $85 Large Global Market Global Assets by Geography Growth Across All Segments Global Assets by Client Segment Corporate & Institutional Services An Attractive Market for C&IS Capabilities $US Trillion 2012E 2016E $26 $21 $19 $12 $5 $2 $36 $47 $26 $33 $23 $34 Europe, Middle East and Africa Mutual/ Collective Funds Retirement Funds Insurance Assets |
BancAnalysts Association of Boston: 31 Annual Bank Conference st 11 Solid Positioning in Institutional Investor Services Growing Presence in Global Fund Services Northern Trust Of the Top… Serves: 200 U.K. Funds 35% 100 U.S. Corporate Plans 46% 200 U.S. Plans 40% 50 U.S. Healthcare 46% 50 U.S. Foundations 32% 50 U.S. Endowments 30% U.K. Local Authority Market 36% 25 Taft-Hartley Funds 40% 100 U.S. Public Funds 30% Top 10 Global Hedge Fund Administrator Top 3 Global Investment Operations Outsourcing Provider (by assets) Largest Fund Administrator in Guernsey (by assets) Largest Custodian in Ireland (by number of funds) Second largest Administrator in Ireland (by number of funds) Corporate & Institutional Services Strong Industry Positioning |
BancAnalysts Association of Boston: 31 Annual Bank Conference st 12 Corporate & Institutional Services C&IS Strategic Priorities |
13 BancAnalysts Association of Boston: 31 Annual Bank Conference st Corporate & Institutional Services 1. Focus on Clients Institutional investors are grappling with multi-faceted challenges Pension funding Endowment draw reductions Risk adjusted client returns Demand for greater transparency Stronger focus on risk governance Pressure to reduce costs Increased regulation and compliance Northern Trust delivering on solutions to enhance client performance Economic and market counsel Dynamic de-risking, risk budgeting, compliance and transparency solutions Integrated front, middle and back office operational solutions Improved analytics for performance and governance assessment Business intelligence providing multiple data views in real-time |
14 BancAnalysts Association of Boston: 31 Annual Bank Conference st Corporate & Institutional Services 2. Driving Performance Driving Performance in C&IS Key Areas of Focus Leveraging enterprise-wide end-to-end processes to improve our efficiency Optimizing the geography of our operational footprint Empowering our clients with more automation Reviewing client product usage and relationship pricing |
15 BancAnalysts Association of Boston: 31 Annual Bank Conference st Corporate & Institutional Services 3. Integrating Acquisitions Bank of Ireland Securities Services (BOISS) Omnium (Northern Trust Hedge Fund Services) Status of Integration: Majority of BOISS clients (90%) and assets (>80%) migrated` Fully integrating with anticipated synergies Transition to Northern Trust data center complete NTHFS has doubled its client base since Omnium acquisition Approximately $180 billion in hedge fund assets under administration Increased presence in fund administration in Ireland Exchange Traded Fund (ETF) administration capabilities Hedge Fund administration capabilities |
Corporate & Institutional Services 4. Innovation Innovation Has Morphed Clients continue to demand value-add Innovation has evolved from capability additions to new solutions Risk Governance Cost Reduction Process Improvement We have re-engineered the way we think about clients’ needs Examples Fully integrated front-to-back information solutions for large, complex clients Tools to increase transparency across holdings Form PF Regulatory support 16 BancAnalysts Association of Boston: 31 st Annual Bank Conference |
17 BancAnalysts Association of Boston: 31 Annual Bank Conference st C&IS Assets Under Custody ($ Trillions) S&P 500 Custody Fees¹ 1 C&IS custody & fund administration fees. 2012 fees are YTD, annualized. Continue to deliver strong growth in Corporate & Institutional Services Great demographics and long-term opportunities Operating environment remains challenging Focus on what we can control to build the franchise Strategic priorities will position business for long-term growth Corporate & Institutional Services Growth & Momentum |
18 BancAnalysts Association of Boston: 31 Annual Bank Conference st Strategically Positioned for Growth Market Leader in Focused Businesses Strong History of Organic Growth Focused on Driving Performance Distinctive Financial Strength |
N O R T H E R N T R U S T C O R P O R A T I O N The Langham Hotel, Boston November 2, 2012 Michael G. O’Grady Steven L. Fradkin Executive Vice President President, Corporate & Chief Financial Officer & Institutional Services BancAnalysts Association of Boston 31 Annual Bank Conference: “Operating in a Suboptimal Environment” st Expertise Integrity Service © 2012 Northern Trust Corporation northerntrust.com |