NTRS's Pension Fund Assets Enhanced - Analyst Blog
May 23 2011 - 5:00AM
Zacks
Last week, Northern Trust
Corporation (NTRS) announced that its UK pension fund
client base substantially increased in 2010. Also, the company
experienced a significant addition in assets under custody.
NTRS’s UK pension fund grew by 15
new clients and its assets under custody increased by $43.9
billion. At current level, NTRS provides custody and associated
services to around 34% of the topmost 200 pension funds in UK and
36% of entire UK Local Government Pension Schemes.
In 2009, the company added 10 new
UK pension fund clients and $13.0 billion in new assets under
custody. On a year-over-year basis, the company has been more
successful in terms of building further relationships across the UK
pensions industry in 2010.
In 2009, NTRS established
Retirement Solutions Practice as the UK pensions market was an
important market for the company. Through Retirement Solutions
Practice, NTRS facilitates pension fund clients in catering the
challenges faced by them in the market. The company makes the
clients aware of the regulatory changes and updates on trends and
challenges affecting them.
Further, diverse challenges are
faced by Local Government Pension Scheme clients compared to UK
corporate pension fund clients. Therefore, NTRS continues to offer
services and solutions to support these clients’ growth.
NTRS has made investments in
businesses to serve its clients in the U.S. and around the world
uninterruptedly. In December 2010, NTRS announced the acquisition
of Waterline Partners, a top ranked investment advisory firm based
in Los Angeles. The company expects Waterline to work in
conjunction with the client-focused strategy of NTRS, and
strengthen the company’s presence on the west coast of the United
States.
We expect increased asset
management and servicing fees based on improvements in equity
markets and higher volumes to benefit NTRS. However, the Dodd-Frank
Act will ring in numerous regulatory changes over the next several
years, which might act as a deterrent to the company’s
fundamentals. As of March 31, 2011, NTRS had $4.4 trillion in
assets under custody and $662.2 billion in assets under
management.
NTRScurrently retains its Zacks #4
Rank, which translates into a short-term ‘Sell’ rating. However,
the closest peer of NTRS, State Street Corporation
(STT) retains a Zacks #3 Rank (a short-term ‘Hold’ rating).
NORTHERN TRUST (NTRS): Free Stock Analysis Report
STATE ST CORP (STT): Free Stock Analysis Report
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