On Thursday, January 23, Northern Trust reported a more than fourfold increase in fourth-quarter profit, surpassing Wall Street expectations. The wealth manager benefitted from a thriving equity market, leading to higher income from asset servicing and management.
Investors have been injecting funds into equity markets, anticipating gains from potential tax cuts and business-friendly policies under the Trump administration. This surge has fueled a market upswing, elevating the value of assets under management (AUM) and the fees collected by firms like Northern Trust, which caters to ultra-high-net-worth families, individuals, and institutions.
Based in Chicago, Illinois, Northern Trust saw a 12% rise in trust, investment, and other servicing fees to $1.22 billion in the fourth quarter compared to a year earlier. Additionally, its assets under custody or administration increased by 9% to reach $16.79 trillion.
The net interest income (NII) rose by 15% to $574.3 million in the fourth quarter, reflecting the difference between earnings on assets and liabilities. Quarterly earnings allocated to common and potential common shares stood at $447 million, or $2.26 per share, up from $106.5 million, or 52 cents per share, a year prior.
Analysts had anticipated earnings per share at $2.02, as per data compiled by LSEG. Northern Trust's foreign exchange trading income also surged by 26% to $61.7 million, driven by increased trading volumes.
In the fourth quarter of 2023, Northern Trust recorded certain expenses related to the Federal Deposit Insurance Corp's deposit insurance fund and incurred a loss of $176.4 million from the sale of debt securities during portfolio realignment.
Other industry peers reported profit increases last week, supported by a rise in fees-based income derived from managing client assets.