January 19, 2011

2010 Q4 Earnings: Northern Trust Profit Falls 22%

Low interest rates drive fall in revenue growth

Wednesday’s announcement of Q4 earnings by Northern Trust Corp. (NTRS.O) disappointed investors, as profits fell 22%, driven down by low interest rates. Earnings per share of $0.64 failed to meet analysts’ expectations of $0.71.

In its Q4 earnings release, the company said that the current provision and charge-off levels reflect continued weakness in some residential and commercial real estate loans.

In a statement, Frederick H. Waddell, chairman and CEO, commented, “Our results for the fourth quarter and the full year have been constrained by the persistent low interest rate environment, which has negatively impacted net interest income and trust fee levels. The adverse market conditions have not, however, limited our ability to continue to grow and attract new business in our targeted markets. As we move into 2011, we are confident that our strategic positioning, strong balance sheet and capital levels position us for profitable growth.”

Northern Trust, as well as other custody banks, is suffering thanks to the low lending rate from the Federal Reserve. It must waive fees on money market funds. Its assets under management dropped 2% from Q3, although assets under custody were up by 4%.

Shares were down 4.59% in midafternoon trading.

Read AdvisorOne's 2010 Q4 earnings calendar for the financial sector for release dates and links to earnings stories.

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