In an effort to take advantage of digital asset markets, Northern Trust Company (NTRS – Free Report) has formed a Digital Assets and Financial Markets group.
The new group will combine the teams that deal with fast-growing digital asset markets and those that provide market access and insights into the traditional securities services space.
Given the growing preference for “developing digital markets and investing in digital assets” as well as allocating to more traditional asset classes such as equities, fixed income, alternatives and private assets, this decision is strategic.
Pete Cherecwich, Chairman of Asset Servicing at Northern Trust, said: “Rather than creating separate business lines, by aligning our focus on digital and traditional markets, we can continue to develop services and capabilities that reflect and truly enable the evolution of our clients’ investments. strategies.”
He added: “As more and more institutional investors enter the digital arena, the rest of the securities industry is also facing an unprecedented amount of change resulting from new regulation, the evolution of the market and the development of emerging technological capabilities. For investors wishing to navigate this environment, our new combined group will provide access to cutting-edge expertise, industry knowledge and continuous innovation across all markets and asset classes.
Notably, NTRS focused on launching businesses. The company’s innovative technology-driven hedge fund administration capabilities, brought to market through Northern Trust Hedge Fund Services, provide an attractive proposition to clients. It is also considering opportunities to expand its private capital space. The implementation of the Target2-Securities (T2S) strategy to provide better services to its clients is commendable. Northern Trust continues to diversify across geographic and customer channels. These efforts will fuel its organic growth.
Company revenue grew at a compound annual growth rate (CAGR) of 2.7% over the past four years (2018-2021) due to higher non-interest income and net interest income (NII ), with some annual volatility. The upward trend continued into the first quarter of 2022. Although Northern Trust’s loan balances declined in the first quarter, it trended upwards, with a CAGR of 13.5% over the last three years (ending in 2021).
Northern Trust looks increasingly confident in the organic growth of the Asset Servicing (AS) and Wealth Management (WM) segments based on a likely strong pipeline over the coming quarters. We believe the company is well positioned to maintain organic growth in the days ahead, supported by the economic recovery.
Shares of this company Zacks Rank No. 3 (Hold) have lost 18.9% so far this year compared to the industry’s 21.6% decline.
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