(Reuters) – Northern Trust on Thursday reported a more than fourfold rise in fourth-quarter profit, beating Wall Street estimates, as a rallying equity market boosted the wealth manager’s income from asset servicing and management.
Investors have been pouring money into the equity markets in the hopes of reaping a windfall from the Trump administration’s potential tax cuts and business-friendly policies.
This has sparked a market rally and boosted the value of assets under management (AUM) and the corresponding fees earned by firms such as Northern Trust, which manages assets for ultra-high-net-worth families, individuals and institutions.
The Chicago, Illinois-based wealth manager’s trust, investment and other servicing fees rose 12% to $1.22 billion in the fourth quarter from a year ago, while its assets under custody or administration gained 9% to $16.79 trillion.
Its net interest income (NII) – the difference between what it earns on assets and pays out on liabilities – climbed 15% to $574.3 million in the fourth quarter.
Northern Trust’s quarterly earnings allocated to common and potential common shares came in at $447 million, or $2.26 per share, up from $106.5 million, or 52 cents, a year earlier.
Analysts on average were expecting earnings of $2.02 per share, according to data compiled by LSEG.
Foreign exchange trading income rose 26% to $61.7 million, driven by higher trading volumes.
In the fourth quarter of 2023, Northern Trust had recorded certain one-time charges tied to the Federal Deposit Insurance Corp’s deposit insurance fund and a loss of $176.4 million on the sale of debt securities during portfolio repositioning.
Peers State Street and BNY also reported a rise in profit last week, boosted by an increase in their fees-based income earned from managing client assets.
(Reporting by Ateev Bhandari and Prakhar Srivastava in Bengaluru; Editing by Shreya Biswas)
