On July 19th, Northern Trust (NTRS.O), an asset and wealth manager, disclosed a 17% decline in its second-quarter profits. The drop was primarily attributed to lower fee-based income, which offset gains from increased interest income.
Uncertainty surrounding the U.S. Federal Reserve’s future rate hikes has generated skepticism among investors, despite the ongoing stock market rally. Concerns over a potential downturn later in the year have led investors to tread cautiously.
Northern Trust’s shares experienced a slight decline in premarket trading following the earnings announcement. The stock has declined approximately 19% since the beginning of the year.
Trust, Investment, and Other Servicing Fees for the quarter amounted to $1.1 billion, marking a 4% decrease compared to the same period last year. This decline partially offset the positive impact of a 12% increase in net interest income for the bank.
For the three months ending June 30, profit allocated to the bank’s common shares amounted to $323.7 million, equivalent to $1.56 per share. In comparison, the bank reported a profit of $388.3 million, or $1.86 per share, during the same period last year.
The financial sector experienced a tumultuous first quarter, facing its most significant crisis since 2008
triggered by the collapse of Silicon Valley Bank in March.
However, banks have been slow to pass on high interest rates to their deposit holders
leading to a shift towards higher-yielding assets like money market funds.
Amidst the challenges, there was a bright spot for Northern Trust, with its total assets under custody or administration increasing by 5% to reach $14.48 trillion.
Despite the drop in profit, the wealth manager’s total revenue fell by only 1% in the quarter, amounting to $1.77 billion.
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