Higher-than-expected revenue growth and improved asset quality propelled Northern Trust Corp. to strong profit gains in the quarter that ended March 31.

The Chicago company said Tuesday that it earned $230.7 million in the first quarter, up 27% from the same period last year. Its earnings per share of 94 cents were 6 cents higher than the estimates of analysts at Sandler O'Neill.

It attributed the improved results to a 9% growth in revenue, to $1.1 billion, that it said was driven primarily by a 7% increase in trust, investment and other servicing fees. Those fees account for roughly two-thirds of the company's overall revenue.

In a research note, Sandler O'Neill said that revenue growth exceeded its projections by roughly $8.2 million. It also said that the net interest margin of 1.1% came in 4 basis points higher than expected.

Meanwhile, nonperforming loans declined by nearly 16% year over year, to $220 million, and the ratio of nonperformers to total loans fell from 0.88% to or 0.67%.

Northern Trust is a custody bank with $107 billion of assets and more than $6 trillion of assets under custody. Its shares were trading at $72.45 early Tuesday, up 3.2% from Monday's close.

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