Wealth Manager Northern Trust Sees Profits Soar
Market Rally Fuels Asset Growth
Northern Trust, a leading wealth manager, has reported a staggering fourfold increase in fourth-quarter profits, surpassing Wall Street estimates. The surge in profits is attributed to the rallying equity market, which has boosted the company’s income from asset servicing and management.
Investors Flock to Equity Markets
The Trump administration’s potential tax cuts and business-friendly policies have sparked a market rally, enticing investors to pour money into the equity markets in hopes of reaping significant returns. This influx of capital has led to a substantial increase in the value of assets under management (AUM) and the corresponding fees earned by firms like Northern Trust.
Fee Income and Assets Under Custody Rise
The Chicago-based wealth manager’s trust, investment, and other servicing fees jumped 12% to $1.22 billion in the fourth quarter, compared to the same period last year. Meanwhile, its assets under custody or administration grew 9% to $16.79 trillion. Net interest income (NII) also climbed 15% to $574.3 million during the same period.
Earnings Beat Expectations
Northern Trust’s quarterly earnings allocated to common and potential common shares reached $447 million, or $2.26 per share, significantly higher than the $106.5 million, or 52 cents, reported in the same quarter last year. Analysts had expected earnings of $2.02 per share, according to data compiled by LSEG.
Foreign Exchange Trading Income Surges
Foreign exchange trading income rose 26% to $61.7 million, driven by increased trading volumes. However, it’s worth noting that the company had recorded certain one-time charges tied to the Federal Deposit Insurance Corp’s deposit insurance fund and a loss of $176.4 million on the sale of debt securities during portfolio repositioning in the fourth quarter of 2023.
Industry Peers Also Report Profit Growth
Northern Trust’s peers, State Street and BNY, also reported a rise in profit last week, driven by an increase in their fees-based income earned from managing client assets. The wealth management industry as a whole appears to be benefiting from the current market conditions.
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