Bloomberg News

Northern Trust Profit Rises 6.8% as Stock Markets Rally

April 17, 2012

Northern Trust Corp. (NTRS:US), the third- largest U.S. independent custody bank, said first-quarter net income rose 6.8 percent after the company won new business and stock markets rallied this year.

Net income increased to $161.2 million, or 66 cents a share, from $151 million, or 61 cents a share, a year earlier, the Chicago-based company said today in a statement. Profit matched the 66-cent average estimate (NTRS:US) of 13 analysts surveyed by Bloomberg.

Northern Trust this year joined rivals State Street Corp. (STT:US) and Bank of New York Mellon Corp. (BK:US) in eliminating jobs to lower expenses as interest rates near zero erode profits. The company said in January it cut 700 jobs. BNY Mellon and State Street eliminated a combined 3,750 jobs in the past 16 months.

“We saw some growth in assets in the last three months, so we’re hoping this is the first sign of revenue growth across the board for the custody banks,” Marty Mosby, a Memphis, Tennessee-based analyst at Guggenheim Securities LLC. Mosby said he expected Northern Trust’s job cuts to affect earnings in the second quarter.

Northern Trust rose 1.5 percent, to $46.87 at 4:00 p.m. in Nasdaq composite trading. The shares have climbed (NTRS:US) 18 percent this year, compared with a 17 percent increase in the 20-company Standard & Poor’s index of asset managers and custody banks.

Revenue increased 7.5 percent from a year earlier and expenses increased 11 percent.

After falling last year, the MSCI ACWI Index of global stocks has gained 9.1 percent this year.

Low interest rates hurt custody banks by reducing return on investments and lending. Northern Trust has also waived some fees on money market mutual funds to keep client returns above zero.

Custody banks keep records, track performance and lend securities for institutional investors, including mutual funds, pension funds and hedge funds. Northern Trust also manages investments for individuals and institutions.

To contact the reporter on this story: Christopher Condon in Boston at ccondon4@bloomberg.net

To contact the editor responsible for this story: Christian Baumgaertel at cbaumgaertel@bloomberg.net


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Companies Mentioned

  • NTRS
    (Northern Trust Corp)
    • $65.47 USD
    • 1.86
    • 2.84%
  • STT
    (State Street Corp)
    • $68.97 USD
    • 1.55
    • 2.25%
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