P R I N C I P L E S T H A T E N D U R E Northern Trust Corporation Michael G. O’Grady Executive Vice President & Chief Financial Officer Credit Suisse Financial Services Forum February 13, 2013 EXHIBIT 99.1 © 2013 Northern Trust Corporation Service Expertise Integrity northerntrust.com |
2 Credit Suisse Financial Services Forum 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 allowance 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 Credit Suisse Financial Services Forum A Highly Focused Business Model Northern Trust Corporation is a global leader in asset servicing, asset management, wealth management and banking for personal and institutional clients. Pension funds Fund managers Insurance Foundations Endowments Sovereign wealth funds Individuals Families Family offices Family foundations & endowments Privately held businesses Market Leader in Focused Businesses Strong History of Organic Growth Focused on Driving Performance Distinctive Financial Strength 3 Credit Suisse Financial Services Forum |
4 Credit Suisse Financial Services Forum High-touch trust, investment management and banking solutions. Global Family Office Wealth Advisory Private Client $1 MM $20 MM $200 MM Comprehensive, advice-driven financial solutions through an integrated team of specialists. Personal Clients Delivering Advice-based Solutions to our Target Markets Teams of specialists are structured to serve three key segments. Sophisticated asset servicing solutions for families with 3 rd party investment consultants. 4 Credit Suisse Financial Services Forum Complexity |
5 Credit Suisse Financial Services Forum Custom asset allocation Comprehensive investment capabilities Broad menu of outside managers Brokerage services Deposit services Custom financing Stock option lending Personal Clients Comprehensive Capabilities Few Firms Can Match Customized investment objectives and strategic asset allocation Manager selection and oversight Asset servicing and administration Family education and governance Family business Non-financial asset management Cash flow analysis Debt management Tax planning Retirement planning Wealth transfer planning Trust and estate services Philanthropic advisory services Securities custody Services are tailored to client needs and goals. Financial Planning Investment Management Private and Business Banking Trust & Estate Services Advisory Services Foundation and Institutional Advisors |
6 Credit Suisse Financial Services Forum Personal Clients Strong Growth Across Segments Private Client & Wealth Advisory Assets Under Management ($ Billions) S&P 500 Private Client & Wealth Advisory Fees Global Family Office Assets Under Custody ($ Billions) S&P 500 Global Family Office Fees Non-managed Managed 6 Credit Suisse Financial Services Forum $87 $91 $95 $107 $118 $103 $114 $123 $140 $156 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 $85 $101 $114 $160 $195 $168 $196 $222 $227 $270 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 |
7 Credit Suisse Financial Services Forum Providing solutions to asset owners and asset managers around the world. Institutional Investor Group (IIG) Global Fund Services (GFS) Pension plans Insurance Sovereign wealth funds Foundations Endowments Traditional funds Hedge funds Fund of funds Exchange Traded Funds Institutional Clients Serving Select Institutional Segments Segments Regions |
8 Credit Suisse Financial Services Forum Institutional Clients A Broad Range of Solutions Asset Administration Fund accounting Transfer agency Corporate secretarial/trustee Valuations Investment operations outsourcing Investment Management Short duration Global index Active Investment outsourcing Liability driven investing Multi-manager Transition management Asset Processing Custody Safekeeping Settlement Derivatives and collateral processing Income collection Corporate actions Tax reclamation White label reporting Valuation analytics Performance analytics Risk monitoring and reporting Trade execution analysis Asset Reporting Asset Enhancement Cross-border pooling Trade execution Cash management Securities lending Foreign exchange Offering an array of asset servicing and asset management services. |
9 Credit Suisse Financial Services Forum Institutional Clients A Distinctive Record of Global Growth Corporate & Institutional Services Assets Under Custody ($ Trillions) MSCI World Index Custody & Fund Admin Fees Corporate & Institutional Services Assets Under Management ($ Billions) Institutional Asset Mgmt Fees 1 Excludes Securities Lending collateral MSCI World Index 1 |
10 Credit Suisse Financial Services Forum Trends Impacting our Businesses Global wealth creation Globalization/cross-border investing Expanding use of alternative assets Shift from active to passive management Increased regulation Focus on risk management Demand for transparency Back and middle office outsourcing Historically low interest rates Low foreign exchange volatility Low securities lending demand Equity markets reflecting increased risk appetite Secular Trends Cyclical Trends |
11 Credit Suisse Financial Services Forum Revenue Enhancements Process Optimization Technology Efficiency Corporate-wide Initiatives Driving Performance Improving Profitability and Returns Surpassed 2012 goal of more than half of $250 million target 2012 benefits were split roughly 40%/60% between revenue and expense Improved 2012 pre-tax margin by approximately 375 basis points and return on equity by approximately 150 basis points On target to achieve $250 million of pre-tax benefit in 2013 |
12 Credit Suisse Financial Services Forum Revenue Trends and Drivers Total Revenue (FTE 1 ) $ in millions -2% +10% -36% +11% +10% +1% -15% +4% Trust, Investment and Other Servicing Fees Other Noninterest Income Net Interest Income Trust Fees FX Trading Income Net Interest Income +3% +3% $2,082 $2,170 $2,406 $382 $325 $206 $265 $267 $294 $958 $1,049 $1,031 $3,687 $3,810 $3,937 2010 2011 2012 FX Trading Income New business Market values Activity levels Currency volatility Volume Client deposit levels Earning asset mix Interest rates (FTE 1 ) 1 Net interest income and total revenue stated on an FTE basis are non-GAAP financial measures. A reconciliation of these measures to reported results prepared in accordance with U.S. GAAP is included in the Appendix on page 17. |
13 Credit Suisse Financial Services Forum Expense Trends and Drivers $ in millions Total Noninterest Expense +2% -4% +12% -4% 0% +16% +13% +8% +14% +20% +13% +3% Outside Services Compensation & Benefits Equipment & Software Occupancy Other Compensation & Benefits Outside Services Equipment & Software Other $1,346 $1,525 $1,526 $460 $553 $529 $287 $328 $367 $168 $181 $174 $237 $244 $283 $2,498 $2,831 $2,879 2010 2011 2012 New business Productivity Global operating model New business Market levels Regulatory environment New business Ongoing investment Includes business promotion, staff-related costs, and account servicing charges |
14 Credit Suisse Financial Services Forum Primary Financial Levers Maximize other revenue in context of macroeconomic environment Grow trust fees through new business Improve productivity by managing expenses relative to trust fees Utilize capital efficiently Focused on driving growth and higher returns. Return on Equity |
15 Credit Suisse Financial Services Forum Strategically Positioned for Growth Market Leader in Focused Businesses Strong History of Organic Growth Focused on Driving Performance Distinctive Financial Strength |
Appendix northerntrust.com © 2013 Northern Trust Corporation Service Expertise Integrity P R I N C I P L E S T H A T E N D U R E |
17 Credit Suisse Financial Services Forum Reconciliation of Non-GAAP Financial Measures The following table presents a reconciliation of interest income and net interest income prepared in accordance with GAAP to interest income and net interest income on a fully taxable equivalent (FTE) basis, a non-GAAP financial measure. Management believes this presentation provides a clearer indication of net interest margins for comparative purposes. ($ In Millions) Reported FTE Adj. FTE Reported FTE Adj. FTE Reported FTE Adj. FTE Interest Income $1,287.7 $40.8 $1,328.5 $1,408.6 $40.2 $1,448.8 $1,296.7 $39.1 $1,335.8 Interest Expense 297.4 – 297.4 399.5 – 399.5 378.0 – 378.0 Net Interest Income 990.3 $40.8 $1,031.1 1,009.1 $40.2 $1,049.3 918.7 $39.1 957.8 Net Interest Margin 1.18% 1.22% 1.22% 1.27% 1.35% 1.41% Total Revenue $3,896.1 $40.8 $3,936.9 $3,769.9 $40.2 $3,810.1 $3,647.7 $39.1 $3,686.8 Twelve Months Ended December 31, 2012 December 31, 2010 December 31, 2011 $ $ $ $ |