Fee-income gains from new business fueled a big improvement in third-quarter profit at Northern Trust in Chicago, offsetting an increase in personnel-related expenses. Still, it said further cost-cutting is on the horizon.
The $131 billion-asset company’s net income climbed 16% to $298 million compared with a year earlier. Earnings per share of $1.20 was 8 cents better than the average estimate of analysts compiled by FactSet Research Systems.
Total revenue on a fully tax equivalent basis rose 11% to $1.36 billion.
“Our third-quarter results continued to demonstrate our ability to drive top-line growth,” Chairman and CEO Frederick Waddell said in a news release Wednesday.
Northern Trust on Tuesday announced that
Noninterest income increased 9% to $991 million. Trust, investment and other servicing fees, the biggest component of noninterest income at Northern Trust, rose 10% to $868 million as a result of favorable equity markets and new business.
Noninterest expense climbed 11% to $936 million due to an additional $6 million of severance charges, and higher payroll taxes and retirement plan expenses.
Northern Trust announced on Wednesday a new cost-cutting program that will target organizational alignment, process optimization and strategic sourcing. Northern Trust projected that the changes will generate yearly savings of $250 million by 2020.
Net interest income rose 17% to $354 million as higher short-term interest rates improved Northern Trust’s profit margin.
Assets under custody and administration rose 14% to $9.7 trillion. Assets under management increased 19% to $1.1 trillion.
