(Reuters) – Northern Trust reported a 42% rise in third-quarter profit on Wednesday, on a higher fee income from servicing and managing client assets, sending the asset and wealth manager’s shares up 4.4% in trading before the bell.
Expectations of further rate cuts which began in September, have bolstered investor sentiment, sparking a market rally, and boosted the value of assets under management (AUM) and the corresponding fees earned by asset managers.
The benchmark S&P 500 index rose 5.5% in the three months ended Sept. 30.
Northern Trust’s investment and other servicing fees rose 8% to $1.2 billion in the third quarter from a year earlier, and its assets under custody or administration jumped 23% to $17.42 trillion.
The Chicago, Illinois-based company provides wealth management, asset management and banking services to institutions, affluent families and individuals.
Earlier this month, Northern’s peers State Street and Bank of New York Mellon also reported a rise in profit, boosted by an increase in their fee-based incomes earned from managing client assets.
Northern Trust’s net interest income (NII) – the difference between what it earns on assets and pays out on liabilities – jumped 21% to $569.4 million in the quarter ended Sept. 30.
Net income came in at $464.9 million, or $2.22 per share, up from $327.8 million, or $1.49 per share, a year earlier.
The company’s foreign exchange trading income rose 4% to $54.1 million.
Northern Trust’s shares have gained 13.5% so far this year, while State Street and BNY have risen 16% and 45.8%, respectively.
(Reporting by Prakhar Srivastava and Pritam Biswas in Bengaluru; Editing by Shinjini Ganguli)
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