Northern Trust's success in attracting new trust and investment management clients helped to boost its third-quarter profit.
The Chicago custody bank's net income rose 10% to $247 million from the same quarter last year. Revenue rose 5% to $1.2 billion. Earnings per share climbed 12% to $1.08, in line with consensus estimates of Wall Street analysts.
The $116.4 billion-asset company attributed the gains to strong growth in net interest income and steady increases in trust and investment fees. Net interest income rose 14% to $349 million on an increase in average earning assets and higher yields on those assets.
Assets under custody rose 13% to $6.7 trillion and assets under management rose 7% to $946 billion.
Noninterest income rose 3% to $911 million on higher trust, investment and other servicing fees, driven by new business and favorable equity markets. Those gains were offset by the unfavorable impact of movements in foreign exchange rates. Foreign exchange trading income fell 13% to $54 million.
Noninterest income was also reduced by $5.4 million of impairment charges on loss on sales from a nonstrategic loan and lease portfolio, and a $2.3 million charge on a valuation adjustment to Visa swap agreements.
Money market fee waivers fell 99% to $200,000. Fee waivers had been eating away profits of custody banks amid near-zero interest rates; however, recent interest rate increases have allowed banks to severely curtail fee waivers.
Noninterest expenses rose 4% to $843 million on higher salaries and employee benefits, a $3 million charge to settle securities-lending litigation and higher Federal Deposit Insurance Corp. deposit-protection costs.
Northern Trust's shares were trading at $70.51 midday Wednesday, down 0.62% from Tuesday's closing price.