Asset and wealth manager Northern Trust reported a 17% drop in second-quarter profit on Wednesday, as lower fee-based income dragged down gains from a boost in interest income.
Uncertainty about the trajectory of future rate hikes by the U.S. Federal Reserve has fueled skepticism among investors keen on taking advantage of a stock market rally but wary of the fallout from a potential downturn later this year.
Shares in Northern Trust were down marginally in premarket trading after the results. The stock has declined roughly 19% so far this year.
The bank's Trust, Investment and Other Servicing Fees for the quarter fell 4% to $1.1 billion compared with a year earlier, partially offsetting a 12% increase in Northern Trust's net interest income.
Profit allocated to the bank's common shares were $323.7 million, or $1.56 per share, for the three months ended June 30, compared with $388.3 million, or $1.86 per share, a year earlier.
The results follow a tumultuous first quarter that saw the financial sector grapple with its biggest crisis since 2008, triggered by the collapse of Silicon Valley Bank in March. Still, banks have been slow to pass on high interest rates to their deposit holders, driving a shift to higher-yielding assets such as money market funds.
In a bright spot, the total assets under custody or administration of Northern Trust increased 5% to $14.48 trillion.
The wealth manager's total revenue fell 1% to $1.77 billion in the quarter.
(Reporting by Sri Hari N S in Bengaluru; Editing by Krishna Chandra Eluri)
