(Reuters) - Asset and wealth manager Northern Trust (NASDAQ:NTRS) posted a 38% fall in first-quarter profit on Tuesday as a loss on the sale of some debt investments offset gains from higher fee income for servicing and managing client assets.
The company incurred a $189.4 million loss on the sale of certain debt securities, as it repositioned its portfolio.
It also booked a $12.5 million expense tied to the replenishment of a government deposit insurance fund, which was drained after Silicon Valley Bank and Signature Bank (OTC:SBNY) failed last year.
Shares of Northern Trust fell 1.2% in premarket trading. They have dipped 0.8% so far this year, compared to a 3.3% fall and 5.8% rise for peers State Street (NYSE:STT) and Bank of New York Mellon (NYSE:BK), respectively.
Northern Trust said the 135-year old company's net interest income (NII) - the difference between what it earns on assets and pays on liabilities - fell 0.6% to $528.1 million due to higher deposits costs.
Equity markets have rallied in recent months amid hopes of a soft landing for the economy, resulting in assets under custody or administration jumping 16% to $16.47 trillion in the quarter.
Rivals State Street and Bank of New York Mellon also saw client assets drive up their fee-based income higher.
The company's trust, investment, and other servicing fees rose 7% to $1.14 billion. Such fees, primarily determined by the market value of client assets managed and serviced, make up more than two-thirds of its total revenue.
Foreign exchange trading income rose 8% to $57 million, driven by higher client volumes.
Chicago, Illinois-based Northern's total revenue fell 5.6% to $1.65 billion.
The company's earnings allocated to common and potential common shares fell to $196.1 million, or 96 cents per share, in the three months ended March 31, from $315.2 million, or $1.51 per share, a year earlier.