By Victoria Stilwell
Northern Trust Corp.'s (NTRS) second-quarter earnings climbed
18% as the trust bank's revenue increased and net charge-offs
sharply declined.
Northern Trust, which provides investment management and other
services to affluent people and large institutions, has seen its
profits challenged by historically low interest rates. Net interest
income climbed 3% in the second quarter from a year earlier.
New business from financial institutions aiming to cut costs by
outsourcing their activities has helped boost fee revenue for
custody banks such as Northern Trust. Fees from trust, investment
and other services increased 8.6% to $605.8 million, accounting for
61% of the company's second-quarter revenue.
Fellow trust bank Bank of New York Mellon Corp. (BK) on
Wednesday reported its second-quarter profit fell 37% as the trust
bank saw a litigation-related charge weigh down its bottom line and
revenue decreased. Meanwhile State Street Corp. (STT) on Tuesday
reported its second-quarter earnings fell 4.5% as the company
posted higher costs for one-time items and lower revenue.
For the second quarter, Northern Trust reported a profit of
$179.6 million, or 73 cents a share, up from $152 million, or 62
cents a share, a year before. The most-recent quarter included
restructuring, acquisition and integration-related charges of 1
cent per share while the year-ago quarter included an 8 cent
per-share impact due to similar expenses.
Revenue rose 4.6% to $988.5 million and includes the benefit of
acquisitions completed in June and July of 2011. Analysts surveyed
by Thomson Reuters recently expected earnings of 75 cents a share
on revenue of $1 billion.
Assets under custody rose 3.4% to $4.563 trillion while assets
under management increased 3% to $704.3 billion.
Provision for credit losses was $5 million, down from $10
million a year before. Net charge-offs--loans lenders don't expect
to collect--totaled $3.2 million, down from $15 million a year
earlier.
Shares closed Tuesday at $47.07 and were inactive in premarket
trade. The stock is up 19% so far this year.
Write to Victoria Stilwell at Victoria.Stilwell@dowjones.com
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