Northern Trust in Chicago reported a double-digit growth in its first-quarter profit as strong gains in both interest and noninterest income more than offset an increase in expenses.

The $121.5 billion-asset custody bank said Tuesday that its net income in the first quarter climbed 12.5% from the same period last year to $276.1 million. Its earnings per of $1.09 came in two cents higher than the estimates of analysts compiled by FactSet Research Systems.

Revenue climbed 8% year over year to nearly $1.3 billion, thanks to a combination of higher interest rates, which boosted interest income, and increases in trust, investment and other servicing fees that were driven by gains in assets under management and custody.

Frederick Waddell, chairman and chief executive officer of Northern Trust.
Its acquisition of UBS Asset Management's funds servicing units in Switzerland and Luxembourg is an example of Northern Trust using its strong capital position "to pursue our strategic initiatives that meet our clients' complex financial needs," said Chairman and CEO Frederick Waddell. Bloomberg News

Interest income increased 15% year over year to $362 million due primarily to a 12% increase in its securities portfolio and a 14-basis-point increase in its net interest margin that was aided by a boost in interest rates.

Noninterest income climbed 6% year over year to $930.9 million. The increase was driven largely by higher fees resulting from a 13% increase in assets under administration year over year and an 11% gain in assets under management.

Noninterest expenses increased 8% year over year due largely to higher personnel costs.

Also in the first quarter, the company announced that it is buying UBS Asset Management's fund administration servicing units in Luxembourg and Switzerland. In Tuesday’s earnings release, Chairman and CEO Frederick Waddell said that the deal is an example of Northern Trust using its strong capital position “to pursue our strategic initiatives that meet our clients’ complex financial needs.”

The deal, which will add roughly $413 billion of client assets and substantially boost Northern Trust’s presence in Europe, is expected to close in the second half of this year.

Alan Kline

Alan Kline

Alan Kline is a senior editor at American Banker overseeing its consumer finance and national/regional banking coverage. He also helps direct coverage of the annual Most Powerful Women in Banking rankings.