Northern Trust Reports Significant Profit Increase

(Reuters) – Northern Trust (NASDAQ:NTRS) reported a 42% rise in third-quarter profit on Wednesday, driven by higher fee income from servicing and managing client assets. This news led to a 4.4% increase in the asset and wealth manager's shares in trading before the bell.

Market Rally

Expectations of further rate cuts, which began in September, have boosted investor sentiment and sparked a market rally, enhancing the value of assets under management (AUM) and the associated fees earned by asset managers. The benchmark S&P 500 index rose 5.5% in the three months ending September 30.

Fee and Asset Growth

Northern Trust's investment and other servicing fees increased 8% to $1.2 billion in the third quarter compared to a year earlier, while assets under custody or administration surged 23% to $17.42 trillion.

The Chicago-based company offers wealth management, asset management, and banking services to institutions, affluent families, and individuals.

Industry Trends

Earlier this month, peers such as State Street (NYSE:STT) and Bank of New York Mellon (NYSE:BK) also reported profit increases, attributed to a rise in their fee-based income from managing client assets.

Net Interest Income and Earnings

Northern Trust's net interest income (NII), which reflects the difference between earned assets and paid liabilities, jumped 21% to $569.4 million for the quarter ending September 30. Net income rose to $464.9 million, or $2.22 per share, up from $327.8 million, or $1.49 per share, a year earlier.

Additionally, the company's foreign exchange trading income rose 4% to $54.1 million.

Year-to-Date Performance

Northern Trust's shares have increased 13.5% this year, while State Street and BNY have seen gains of 16% and 45.8%, respectively.