By Erin McCarthy and Andrew R. Johnson
Northern Trust Corp.'s shares fell as much as 4.8% on Tuesday
after the trust bank reported first-quarter results that missed
analyst estimates despite growth in client assets.
The Chicago-based bank said its profit rose 11% on higher fee
income, driven by growth in both assets under custody and assets
under management.
Northern Trust's profit increased to $181.4 million, or 75 cents
a share, up from $164 million, or 67 cents, a year earlier. Revenue
rose 6.6% to $1.04 billion.
Analysts polled by Thomson Reuters had most recently forecast
per-share earnings of 78 cents on revenue of $1.07 billion.
Shares were down 3% at $59.40 in recent trading.
Northern Trust provides investment-management and other services
to affluent consumers and large financial institutions. Analysts
have predicted a rally in equity markets in recent months would
help Northern Trust and its competitors, State Street Corp. and
Bank of New York Mellon Corp., contend with low interest rates.
"While it's still a miss, we think the core business trends are
pretty good," Glenn Schorr, an analyst with ISI, wrote in a
research note on Tuesday. He added that Northern Trust "will
clearly be a big beneficiary of higher rates."
New business from financial institutions looking to save money
by outsourcing some activities they would have done themselves has
also helped bolster Northern Trust's fee revenue in recent
quarters.
Noninterest income increased 5.9% to $794.8 million, helped by
an 7.7% rise in fees from trust, investment and other services. The
company attributed the increase in fees to new business and
favorable equity markets.
Assets under custody increased 15% to $5.75 trillion while
assets under management increased 13% to $915.4 billion.
Net interest income rose 8.7% to $245.7 million.
The provision for credit losses fell to $3 million from $5
million, and net charge-offs, or loans that lenders don't expect to
collect, totaled $1.5 million, down from $8.7 million a year
before.
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