(Reuters) - Northern Trust (NASDAQ:NTRS) reported a 42% rise in third-quarter profit on Wednesday, on a higher fee income from servicing and managing client assets, sending the asset and wealth manager's shares up 4.4% in trading before the bell.
Expectations of further rate cuts which began in September, have bolstered investor sentiment, sparking a market rally, and boosted the value of assets under management (AUM) and the corresponding fees earned by asset managers.
The benchmark S&P 500 index rose 5.5% in the three months ended Sept. 30.
Northern Trust's investment and other servicing fees rose 8% to $1.2 billion in the third quarter from a year earlier, and its assets under custody or administration jumped 23% to $17.42 trillion.
The Chicago, Illinois-based company provides wealth management, asset management and banking services to institutions, affluent families and individuals.
Earlier this month, Northern's peers State Street (NYSE:STT) and Bank of New York Mellon (NYSE:BK) also reported a rise in profit, boosted by an increase in their fee-based incomes earned from managing client assets.
Northern Trust's net interest income (NII) - the difference between what it earns on assets and pays out on liabilities - jumped 21% to $569.4 million in the quarter ended Sept. 30.
Net income came in at $464.9 million, or $2.22 per share, up from $327.8 million, or $1.49 per share, a year earlier.
The company's foreign exchange trading income rose 4% to $54.1 million.
Northern Trust's shares have gained 13.5% so far this year, while State Street and BNY have risen 16% and 45.8%, respectively.