Northern Trust sees net income drop 13%

The bank saw profits decline 62% for Q4 compared to the same period the previous year, although net interest income rose on the back of higher rates.

Northern Trust reported its Q4 results for 2022 this week, and the bank has followed the prevailing Wall Street trend of depressed performance, albeit with a few bright spots.  

Net interest income rose by 5% to $550 million compared to the previous quarter, largely due to higher rates. However, revenues declined by 13% compared to the previous quarter, and 8% compared to the previous year, falling to $1.53 billion.  

Custody and fund administration fees decreased from the prior-year quarter, primarily due to unfavourable markets and unfavourable currency translation, although this was partially offset by new business.  

Investment management fees also decreased sequentially, primarily due to asset outflows. However, investment management fees increased from the prior-year quarter driven by lower money market fund fee waivers. Other trust, investment and other servicing fees also increased from the prior-year quarter. Total asset servicing income fell by 6% year on year. 

FX trading income decreased compared to Q3, primarily driven by decreased foreign exchange swap activity in Treasury and lower client volumes. Security commissions and trading income increased sequentially however, primarily due to higher core brokerage activity.  

Other operating income decreased sequentially primarily due to higher expenses related to existing swap agreements related to historical sales of Visa Inc. Class B common shares. Other operating income decreased compared to the prior-year quarter primarily driven by gains from property sales in the prior-year quarter and the accounting reclassification.  

“Northern Trust’s fourth quarter results reflected strong year-over-year growth in net interest income, which more than offset lower trust fees,” said chairman and CEO Michael O’Grady.  

“Expense levels remained elevated as we continued to invest in people and technology to enhance our resiliency and support growth in the business. Reported results included $266 million in charges related to a repositioning of our securities portfolio and, in part, steps we are taking to optimize our cost base and drive greater efficiencies throughout the company. These actions underscore our commitment to improving our profitability. As we look ahead, we are focused on driving organic growth, improving our productivity and further strengthening our foundation.”