Northern Trust: Strategic Diversification in Asset Gathering UBS Asset Gathering Conference

Transcription

1 N O R T H E R N T R U S T C O R P O R A T I O N Northern Trust: Strategic Diversification in Asset Gathering UBS Asset Gathering Conference Steven L. Fradkin Executive Vice President & Chief Financial Officer March 29, 2007 Boston, Massachusetts 2007 Northern Trust Corporation northerntrust.com

2 Forward Looking Statement This presentation may include forward-looking statements such as statements that relate to Northern Trust s financial goals, dividend policy, expansion and business development plans, 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 in litigation 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, 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 2006 financial 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. 2 Northern Trust: Strategic Diversification in Asset Gathering

3 Today s Agenda Northern Trust: Strategic Diversification in Asset Gathering Strong Asset Gathering Track Record Asset Gathering Focused on Attractive Demographic Markets Strategic Diversification in Asset Gathering Activities: Asset Servicing Asset Management Other Complementary Activities A Leader in Gathering Assets Organically 3 Northern Trust: Strategic Diversification in Asset Gathering

4 Northern Trust Corporation A Client-centric and Highly Focused Asset Gathering Business A S S E T G A T H E R I N G Personal Financial Services Serving private clients residing in the U.S. and abroad Asset Servicing Asset Management Banking Corporate & Institutional Services Serving institutional investors worldwide Integrated Operations & Technology Platform 4 Northern Trust: Strategic Diversification in Asset Gathering

5 Strong Asset Accumulation in stark contrast to equity markets $3.6 Assets Under Custody $3.5 Trillion 5 Year CAGR (12/31/01 12/31/06) +17% $1.8 Global Custody Assets $1.7 Trillion 5 Year CAGR (12/31/01 12/31/06) +30% $700 Assets Under Management $697 Billion 5 Year CAGR (12/31/01 12/31/06) +17% $3.0 $1.5 $600 $2.4 $1.8 R E C O R D $1.2 $0.9 R E C O R D $500 $400 $300 R E C O R D $1.2 $0.6 $200 $0.6 $0.3 $100 $ $ $ Year CAGR: Dow Jones S&P 500 NASDAQ EAFE +5% +4% +4% +6% 5 Northern Trust: Strategic Diversification in Asset Gathering

6 N O R T H E R N T R U S T C O R P O R A T I O N Asset Gathering Activities: Focused on Attractive Demographic Markets 6

7 Personal Financial Services Attractive Growth Projections in the Affluent Market Projected Annual Growth Rate % 15.0% 14% 12% 10% 8% 6% 8.5% 10.4% 4% 2% 1.4% 0% U.S. Households $1-$10 Million Households $10-$75 Million Households $75+ Million Households Source: U.S. Census Bureau, Claritas, Survey of Consumer Finances, Company Research. 7 Northern Trust: Strategic Diversification in Asset Gathering

8 Corporate & Institutional Services A World of Vast and Growing Opportunities United States $50 Trillion $40 Trillion $22 Trillion Latin America, Mid-East & Other Asia Europe $28 Trillion Japan, China & India Total World Capital Market: (1) $140 Trillion Total Assets Under Custody Worldwide: (2) $60 Trillion (1) McKinsey & Company Mapping the Global Capital Market, Third Annual Report, January 2007 (2) Buttonwood 2006 Yearbook Top 11 custodians 8 Northern Trust: Strategic Diversification in Asset Gathering

9 N O R T H E R N T R U S T C O R P O R A T I O N Asset Gathering Activities: Asset Servicing 9

10 Gathering Institutional Custody Assets Custody & Related Services:* Safekeeping Settlement Income Collections Corporate Actions Accounting Reporting Valuation Rates of Return Multinational HQ Reporting Attribution Analysis Value at Risk Cross-border Pension Pooling Compliance Monitoring Market Event Analysis Corporate & Institutional Assets Under Custody 5-Yr CAGR C&IS AUC +17% S&P % EAFE +6% $4.0 $3.0 $2.0 $1.0 $0.0 ($ trillions) $1.5 $ *Representative list of some, but not all, custody and related services 10 Northern Trust: Strategic Diversification in Asset Gathering

11 Gathering Personal Trust & Fiduciary Assets Trust & Custody Services:* Fiduciary Administration and Oversight Investment Management Family Business Services Charitable Services Estate Settlement Services Real Estate and Farm Management Asset Custody Minerals Management Personal Financial Services Assets Under Custody 5-Yr CAGR PFS AUC +12% S&P % $300 $200 $100 ($ billions) $160 $282 $ *Representative list of some, but not all, personal trust and custody services 11 Northern Trust: Strategic Diversification in Asset Gathering

12 Spotlight: Gathering Wealth Management & Family Office Assets Wealth Management Group: Global Asset Servicing for Multi-Manager Investment Programs Fiduciary Services in an Open Architecture Environment Family Office Support Private Banking & Finance Data Aggregation & Customized Reporting Tax Lot & Partnership Accounting Investment Consulting & Performance Measurement Networking & Education Opportunities Family Members and Family Office Executives Wealth Management Assets Under Custody* $175 $150 $125 $100 $75 $50 $25 $0 ($ billions) 5-Yr CAGR WMG AUC +20% S&P % $65 $ *Wealth Management AUC is a component of Personal Financial Services AUC 12 Northern Trust: Strategic Diversification in Asset Gathering

13 N O R T H E R N T R U S T C O R P O R A T I O N Asset Gathering Activities: Asset Management 13

14 Gathering Managed Assets Asset Management for Institutional Clients:* Cash, Active, and Passive Investing Alternative Investments Manager of Managers Securities Lending Transition Management Commission Management Total Assets Under Management $700 ($ billions) 5-Yr CAGR Total AUM +17% S&P % EAFE +6% $697 Asset Management for Personal Clients:* Cash, Active, and Passive Investing Structured Investment Services Manager of Managers Alternative Investments Single Stock Concentration Strategies Securities Lending for Wealth Management Clients $350 $0 $ *Representative list of some, but not all, asset management services 14 Northern Trust: Strategic Diversification in Asset Gathering

15 Spotlight: Gathering Assets Through External Managers NTGA Assets Under Management ($ billions) Northern Trust Global Advisors: Manager of Managers Subsidiary Investment Program Solutions Emerging & Minority Managers Fund of Hedge Funds Fund of Private Equity Funds 5-Yr CAGR NTGA AUM +18% S&P % $40 $20 $15 $35 $ Northern Trust: Strategic Diversification in Asset Gathering

16 Spotlight: Gathering Assets* Through Open Architecture Outside Manager Assets ($ billions) Open Architecture for Private Clients: Separately Managed Accounts Model Accounts Multi-Advisor Funds Multi-Manager Mutual Funds 5-Yr CAGR Open Arch. AUM +48% S&P % $5.0 $2.5 $4.3 $0.6 $ *Private Client assets 16 Northern Trust: Strategic Diversification in Asset Gathering

17 N O R T H E R N T R U S T C O R P O R A T I O N Asset Gathering Activities: Other Complementary Activities 17

18 Gathering Fund Administration Assets Fund Administration Assets ($ billions) Fund Administration Services: Fund Accounting Hedge Fund Administration Private Equity Administration Property Administration Investment Operations Outsourcing Active Collateral Management 5-Yr CAGR Fund Administration +22% S&P % EAFE +6% $1,000 $750 $500 $250 $323 $863 $ Northern Trust: Strategic Diversification in Asset Gathering

19 Gathering Broker-Dealer Services Assets Northern Trust Securities Inc. ($ billions) Brokerage: Registered Brokerage Firm Broad Array of Equity and Fixed Income Services Electronic / Portfolio Trading Personal and Institutional Clients 5-Yr CAGR Brokerage Assets +12% S&P % $18 $9 $9 $15 $ Northern Trust: Strategic Diversification in Asset Gathering

20 N O R T H E R N T R U S T C O R P O R A T I O N Asset Gathering Activities: A Leader in Organic Asset Accumulation 20

21 Accumulating Custody Assets Organically 5 Year Growth in Assets Under Custody ($ Trillions, 12/31/01 to 12/31/06) Organic Growth 5 Yr CAGR +16.5% +16.3% (1) 5 Yr CAGR +13.5% 5 Yr CAGR +16.6% 5 Yr CAGR +13.8% +13.5% (2) +15.5% (3) +9.2% (4) $4.0 $3.0 $3.5 $15.0 $12.0 $13.0 $5.0 $4.0 $4.5 $14.0 $12.0 $10.0 $11.9 $2.0 $1.7 $9.0 $6.0 $6.9 $3.0 $2.0 $2.1 $8.0 $6.0 $6.2 $1.0 $3.0 $1.0 $4.0 $2.0 $0.0 Northern Trust $0.0 Bank of New York $0.0 Mellon $0.0 State Street 1) NTRS acquired $34B in AUC in ) BK has made numerous acquisitions since 2001; acquired AUC not disclosed. 3) MEL formed JV in JV AUC totaled $221B in ) STT acquired $2.2T in AUC in Source: Company reports 21 Northern Trust: Strategic Diversification in Asset Gathering

22 Leading Long-Term Growth in Global Custody Assets Based on Reported Results Global Custody Assets* as a % of Total Assets Under Custody 10-Year CAGR 1996 to Global AUC AUC NTRS 14% 48% 31.7% 16.4% BK 12% 36% 29.7% 15.8% MEL n/a 34% n/a 15.6% STT 7% 24% 30.5% 15.0% *Global Custody Asset Definitions per Annual Reports: BK - cross border assets MEL - assets from the ABN AMRO joint venture and CIBC Mellon Global Securities Services STT - customers outside the U.S. 22 Northern Trust: Strategic Diversification in Asset Gathering

23 Northern Trust Corporation Strategic Diversification in Asset Gathering Assets Under Custody Global Custody Wealth Management Assets Under Management Manager of Managers Open Architecture Investment Operations Outsourcing Fund Administration Assets Brokerage Assets Personal Clients Corporate Executives Entrepreneurs Professionals Family Offices Families Retirees Institutional Clients Pensions Insurance Companies Foundations Endowments Hedge Funds Private Equity Funds Investment Managers International Domestic 23 Northern Trust: Strategic Diversification in Asset Gathering

24 Northern Trust Corporation Results in Strong Positioning for Future Success Strong, Organic Long-Term Growth Highest Pre-Tax Profit Margins in Industry Innovative Solutions for Clients Consistently High Client Satisfaction Giving Our Clients the Freedom to Focus on What Really Matters 24 Northern Trust: Strategic Diversification in Asset Gathering

25 N O R T H E R N T R U S T C O R P O R A T I O N Northern Trust: Strategic Diversification in Asset Gathering UBS Asset Gathering Conference Steven L. Fradkin Executive Vice President & Chief Financial Officer March 29, 2007 Boston, Massachusetts 2007 Northern Trust Corporation northerntrust.com