Northern Trust in Chicago recorded a modest improvement in second-quarter profit as the effects of severance charges and a one-time item offset healthy growth in its core trust-services business.
Net income at the $126 billion-asset company rose 2% to $268 million from the same period last year. Earnings per share of $1.12 were 11 cents lower than the estimates of analysts compiled by FactSet Research Systems.
Total revenue, on a fully taxable equivalent basis, was little changed at $1.3 billion.
Noninterest income fell 4% to $980 million. The drop was due primarily to an unfavorable comparison with the year-ago quarter, which included a pretax revenue gain of $97 million from the sale of 1.1 million Visa Class B shares.
Additionally, a drop in foreign exchange trading income contributed to the decline in noninterest income. FX income fell 22% to $50 million.
Trust, investment and other servicing fees, the largest segment of noninterest income, rose 9% to $848 million from the effects of favorable equity markets and new business wins.
The underlying results “continued to demonstrate our ability to drive strong growth within both our wealth management and institutional businesses,” Chairman and CEO Frederick Waddell said in a news release.
Noninterest expense rose 1% to $937 million on higher salaries and employee benefits, and software and equipment expenses. Northern Trust also recorded $23 million in charges to cover severance and related activities.
Net interest income rose 14% to $350 million because of an improvement in the net interest margin and an increase in earning assets.
Assets under custody and administration rose 15% to $9.3 trillion. Assets under management rose 14% to $1 trillion.
Separately on Wednesday, Northern Trust named David Wicks head of its continental Europe business. Wicks was previously regional executive for enterprise operations in the company’s Europe, Middle East and Africa region. Additionally, Northern Trust said it will create a European Union bank in Luxembourg.
