Northern Trust Corporation (NASDAQ: NTRS) stock rose over 0.8% on April 17th, 2018 (as of 1:53 PM GMT-4 ; Source: Google finance) post a decent first quarter of 2018 performance.
The group’s revenue rose 15% yoy with non-interest income rising 17%, while net interest income surging 8%. The provision for credit losses was a credit of $3 million. The bottom line, Net income surged 38% on a yoy basis while the sequential comparison, revenue rose 3% with non-interest income rising 5%. Net interest income fell 1%.
As per the segment performance, Trust, Investment & Other Servicing Fees which is the largest component of the group’s revenue, reached $938 million in the first quarter, rising 16% year-over-year, and rose 3% against the earlier quarter. Excluding the UBS acquisition fees surging 13% on a year-over-year basis. Adoption of the new revenue recognition standard increased fees by $8 million during the quarter within their wealth management business.
Foreign Exchange Trading Income surged 63% yoy to $78 million in the first quarter, while rose 25% sequentially. Higher volumes and a better foreign exchange swap activity in their treasury department drove the performance.
The Earnings per share were $1.58, which included a net $6.8 million tax benefit related with the true up relating to the Tax Cuts and Job Act, and a change in accounting method for software development-related expense deductions, an $8.6 million charge associated with severance-related and restructuring charges.
Return on average common equity performance was strong at 16% for the quarter, which is a rise as compared to 11.6% one year ago, and up from 15.1% in the prior quarter. The Assets under custody/Administration, rose 21% yoy and a 1% on a sequential basis. Assets under custody rose 14% yoy to $8.1 trillion, while slightly rising on a sequential basis. Positive market impacts, new business, and favorable movements in foreign exchange rates drove the performance.
Assets under management surged 16% yoy to $1.2 trillion, boosted by favorable markets and new business flows. Markets were favorable on a year-over-year basis with the S&P 500 and MSCI EAFE indices rising 11.8 and 2.5 respectively. But on a sequential basis, both indices declined with the S&P 500 down 1.2% and the EAFE down 5.1%. The British pound and euro ended the quarter rose 12% and 16% respectively against the prior year as compared to the U.S. dollar.