Northern Trust Corporation (NASDAQ:NTRS) Posts Better Than Expected Earnings

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Dallas, Texas 07/24/2015 (FINANCIALSTRENDS) – Northern Trust Corporation (NASDAQ:NTRS), second quarter profit, rose to $269.2 million or $1.10 per share, thanks to improved credit quality as well as an increase in assets under management. However, the Street remains concerned by an increase in operational expenses which continues to weigh in on earnings.

Increase in Asset under Management

Northern Trust Corporation (NASDAQ:NTRS), which offers investment management services, saw assets under custody grow by 1.9% in the quarter to $6.18 trillion. Assets under management currently stand at $945.6 billion. With offices in 19 states and 20 countries, the company generates most of its revenues from noninterest income made of trust, investment and servicing fees.

Fee-based income in the quarter grew by 15% to $1 billion as new businesses as well as higher equity markets resulted in a 7% growth on the company’s largest segment. High-Security yields, as well as reduced cost of interest related funds, were offset by short term interest bearing deposits in the quarter.

Concerns over Expense Increase

Higher security commissions and an improvement in foreign exchange trading income resulted in a 20% increase in the company’s Non-interest income that came in at $1 billion. However, a 5% year-over-year increase in Non-interest expenses should be a point of concern. Should the company fail to initiate measures to control its expenses then its profit margins could come under immense pressure

Northern Trust Corporation (NASDAQ:NTRS)’s capital position remains stronger than ever the company having repurchased 1.3 million shares for $96.7 million at an average price of $74.64 a share. The Board of Directors has also approved a $0.36 per share dividend on common stock. The dividend is to be paid to shareholders on October 1, 2015, to shareholders of record as of September 4, 2015. The company’s stock has registered a healthy run since the start of the year having surged by more than 16% against a 3% gain by the S&P 500.

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