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

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.

Mike O'Grady, CEO of Northern Trust.

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.

For reprint and licensing requests for this article, click here.
Custody banks Earnings Trump tax plan Tax cuts Tax Corporate taxes Illinois
MORE FROM AMERICAN BANKER