New asset deals, M&A drive 14% gain in fee income at Northern Trust

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Northern Trust in Chicago reported higher fourth-quarter profit, citing a one-time benefit from the new tax law and higher fees from trust services and fund administration.

The $139 billion-asset company’s net income improved 34% to $357 million from a year earlier. Earnings per share of $1.51 were 21 cents better than the mean estimate of analysts compiled by FactSet Research Systems.

The results included a net benefit of $53.1 million from a variety of adjustments made as a result of the Tax Cuts and Jobs Act. Northern Trust also paid $12.9 million to fund a one-time cash bonus to employees that was related to the new tax law. Additionally, Northern Trust recorded $17.6 million in severance and restructuring charges.

Noninterest income increased 14% to $1.04 billion on a surge of trust, investment and servicing fees.

Assets under custody and administration rose 26% to $10.7 trillion from new business and the acquisition of a fund administration unit from UBS Asset Management. Assets under management climbed 23% to $1.2 trillion.

“Both revenue and fee growth for the quarter were 15% and substantial across all of our businesses,” CEO Michael O’Grady said in a news release Wednesday. “The quarter represented our sixth consecutive quarter of accelerating fee growth on a year-over-year basis, reflecting the powerful combination of favorable macroeconomic conditions and organic growth.”

Noninterest expense rose 15% to $1 billion due to higher employee benefits and compensation costs.

Net interest income increased 17% to $380 million on higher yields due to rate hikes, and higher levels of average earning assets.

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