Michael O'Grady
Chairman and CEO at Northern Trust
Thank you, Jennifer. Let me join in welcoming you to our 4th-quarter 2024 earnings call. Our 4th-quarter results kept off a solid year of progress executing against our strategic priorities. Relative to the prior year, 4th-quarter trust fees were up 12% and net interest income grew 15%. Excluding notables in the prior year, revenue was up 13% and earnings per share grew by more than 50%. Importantly, we generated positive trust fee and total operating leverage for the second consecutive quarter, while continuing to make significant investments in our business and infrastructure.
For the full-year, excluding notables, revenue was up 8% and we generated positive trust fee operating leverage and total operating leverage in excess of two points, which translated into EPS growth of 24%. We also returned more than $400 million to shareholders in the 4th-quarter and $1.5 billion for the full-year, reflecting a five-year high. Our results benefited from strong market performance, but also reflect continued progress implementing our One Northern Trust strategy.
Turning to Slide 4. At the beginning of last year, we launched our One Northern Trust strategy, which serves as our roadmap to becoming a consistently high-performing company and producing meaningful value for all stakeholders. Our strategy is underpinned by three pillars: optimizing growth, strengthening resiliency and managing risk and driving productivity.
Turning to Slide 5, we made significant progress across all three pillars in 2024. Let's begin with optimizing growth. Our organic growth trajectory improved across all three businesses with good momentum exiting 2024. Our One Northern Trust strategy places an emphasis on enhancing the client experience while driving sustainable, scalable organic growth. Leveraging the capabilities of the entire firm, we deepened existing client relationships, adding products and services to meet their increasingly complex needs. We also embraced a more intentionally united focus for servicing our global client franchise, executing a joint calling program, which resulted in over 140 new business opportunities.
As an example, NTAM, our asset management business, worked in close partnership with our global family office and asset servicing businesses to develop a money market solution for a client seeking greater tax efficiency for its sizable cash investments. This turned out to be highly-attractive to a number of our clients and we experienced one of the fastest fundraises in NTAM history, raising nearly $3 billion over the course of six months with participation from 18 clients. As we enter 2025, we will further institutionalize these approaches through enterprise-wide initiatives aligning with meeting our clients' greatest needs and key industry trends such as alternative investment solutions, family office services and liquidity solutions. We will also continue to prioritize growth in wealth and asset management and foster stronger collaboration between both businesses.
Relative to strengthening resiliency and managing risk, critical to maintaining our reputation for strength and stability for clients, regulators and the markets. Last year, we designed and launched a multi-year effort to uplift our risk and control system and added new capabilities to strengthen resiliency. We invested in technology to eliminate legacy software applications, mature our cloud environment and bolster our cyber defenses. We also made steady progress automating processes and adopting additional artificial intelligence tools, thereby reducing the number of manual processes meaningfully. In support of these initiatives, we created a new operating model and made a number of strategic hires. In 2025, we will continue to prioritize investments to further strengthen our resiliency, including modernizing our core platforms, accelerating our cloud adoption and pursuing additional opportunities to automate and deploy AI.
We made meaningful progress driving productivity in 2024 and laid the groundwork to generate efficiencies in the coming years. We focused on key cross-functional areas in 2024, such as workforce and vendors, ending the year with headcount 1% lower than two years ago, despite launching a number of growth initiatives and adding resources to support our resiliency efforts.
Within Asset Servicing, we've reduced headcount for seven consecutive quarters, translating to a more than 7% decrease relative to peak staffing levels. And importantly, many of the resiliency initiatives have also resulted in significant savings, particularly from automation and digitization. Going-forward, we will continue to enhance our productivity efforts, including leveraging the office of the Chief Operating Officer to implement more structural change to further centralize, standardize and automate operations and processes.
Turning to our business unit-level performance, beginning with wealth management on Slide 6. In 2024, we made foundational investments to deliver higher levels of organic growth on a more consistent basis. We grew our sales talent by nearly 20%, enhanced our lead flow channels and grew our prospect pipeline materially. More recently, we transitioned our executive leadership and made important strategic hires across various markets and functions. As a result of these efforts, we saw steady improvement throughout the year in our organic growth trajectory with particular strength in GFO. We also increased wealth deposits by 9% and expanded our segment pre-tax margin by nearly 400 basis-points relative to the prior year.
And as a testament to the value proposition we provide to clients, we were awarded Best Private Bank in the US for the 13th time in the past 16 years by the Financial Times Group. In 2025, Wealth Management will continue to maintain and strengthen our lead position in the upper wealth tiers. Within our global family office business, we will continue to optimize existing client relationships, bolster investment advisory capabilities and expand into new markets, including international areas with significant potential. By establishing a separate ultra-high net-worth practice, we will leverage our world-class family office platform to better serve wealthy families with more than $100 million in net-worth whose needs differ from those of our core wealth clients.
We also plan to deepen our penetration of select target markets in the US that have significant wealth and where we have an opportunity to increase our market-share. To capitalize, we will add talent, invest in brand awareness and pursue market-specific growth opportunities. We will also expand our suite of alternative investment solutions for wealth clients.
Turning to asset management on Slide 7. We refreshed our strategy in 2023 following the hiring of Daniel Gomba, our asset Management President. This included focusing on products where we have the clear right to win and more fully leveraging the full capabilities of the firm. We made meaningful progress in 2024 through investing in our platform and in core products. We refined our go-to-market partnership with asset Servicing, creating more comprehensive solutions for clients and prospects, which resulted in more than 35 new client wins. Leveraging the success, we launched multiple products specifically geared toward the needs of our asset servicing, GFO and ultra-high net-worth wealth segments.
As a result, we realized positive net flows for the year, including 13% growth in liquidity, which surpassed $300 billion in AUM and generated positive long-term flows in the second-half of the year. We also improved the trajectory of our organic fee growth meaningfully, all while delivering investment performance above our benchmarks. We aim to carry this momentum into 2025 by investing in areas of growth that are both aligned with secular trends in the industry and where we have the right to win. These include expanding our alternatives offerings, capturing growth in custom SMAs and broadening our ETF presence while simultaneously maintaining our focus on core strengths in liquidity solutions, indexing, Quant and fixed-income.
Turning to asset Servicing on Slide 8. Last year, we began to pivot the focus of our asset servicing business to pursue scalable growth in the core business, leveraging existing capabilities rather than bespoke build-outs to generate positive operating leverage and maximize our value to both clients and shareholders. And to support this effort, we implemented disciplined criteria for new business generation to ensure that it is accretive both at inception and on an ongoing basis. As a result, we bid on fewer opportunities in 2024, yet saw no meaningful degradation to our win rate. We also prioritize growth within our highly scalable capital markets business, which grew 17% in 2024 with roughly 50% of this growth coming from new clients. These new clients in-turn became prospects for our core custody and fund administration services. As a result, we finished the year with improved organic growth and profitability and a solid pipeline of business to onboard.
In 2025, we will continue the momentum, investing in areas to support our clients' evolving needs and to capitalize on industry changes and asset flow trends. This includes sharpening our focus on global private markets and targeted asset-owner clients and accelerating the growth of our banking and capital markets business. I hope these additional slides have given you a deeper understanding of our business and strategic objectives.
Let's turn to our medium-term financial targets on Slide nine. By focusing on driving organic growth and generating positive fee and total operating leverage, our medium-term targets are to achieve an expense to trust fee ratio of 105% to 110%, pre-tax margins above 30% and an ROE at the upper half of our range of 10% to 15%, along with double-digit EPS growth and meaningful capital return to shareholders.
In conclusion, we're confident in our One Northern Trust strategy and determined to execute with discipline to be a consistently high-performing company for all our stakeholders. Our success couldn't be possible without the unwavering efforts of our more than 23,000 global partners. I'd like to thank them for their ongoing support of our clients with service, expertise and integrity, the enduring principles that underlie all that we do. And with that, I'll turn it over to Dave to review the financials. Dave?
