Acquisition of UBS unit, foreign exchange propel Northern Trust

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A European acquisition and trading activity helped boost Northern Trust's second-quarter profit.

The $135 billion-asset custody bank’s net income increased 47% from a year earlier to $380 million. Earnings per share were $1.68, which was 5 cents better than the mean estimate of analysts compiled by FactSet Research Systems.

“This quarter’s results reflected organic growth in our businesses along with generally favorable macroeconomic conditions,” CEO Michael O’Grady said in a news release Wednesday from the Chicago bank. “Trust, investment and other servicing fees, net interest income, and foreign exchange trading income all delivered double-digit, year-over-year growth.”

Noninterest income rose 12% to $1.1 billion. Fees from custody and fund administration climbed 15% to $377 million, driven partly by the acquisition of UBS Asset Management’s fund administration businesses in Luxembourg and Switzerland. Income from foreign exchange trading jumped 58% to $79 million. Fees from securities lending rose 23% to $30 million on increased loan volumes.

Assets under custody and administration rose 15% to $10.7 trillion. Assets under management increased 12% to $1.1 trillion. The two asset groups are the largest component of Northern Trust’s noninterest income.

Noninterest expense rose 6% to $997 million. The results included $6.6 million of severance payments and restructuring expenses, and $2.6 million of costs related to the UBS acquisition.

Net interest income climbed 21% to $413 million as interest expense nearly doubled.

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