Northern Trusts assets under custody have increased 24% year-on-year to the second quarter of 2011 to $4.42 trillion, following the growth trend of other global custodians.
AuC rose from $3.55 trillion at the end of the second quarter last year. Assets increased only slightly from the first quarter this year, when total AuC stood at $4.37 trillion, according to the firms quarterly report.
Corporate and institutional assets under custody totaled $4.03 trillion, up 25% from Q2 2010. Of that amount, global custody assets accounted for $2.5 trillion, a rise of 35% over the previous year. The increases do not take into account assets under custody from Bank of Ireland Securities Services, which Northern Trust acquired in February.
Trust, investment and other servicing fees in the Corporate & Institutional Services division decreased by 2% to $308.5 million from $316.0 million last year. Northern Trust attributes the decline to lower securities lending revenue, which dropped by more than half to $30.9 million from $66.3 million in Q2 last year. The prior year quarter included the recovery of previously recorded unrealized asset valuation losses of approximately $37 million in a mark-to-market investment fund used in securities lending activities, Northern Trust explained in the report. As of September 30, 2010, securities in the mark-to-market fund had been sold with the proceeds reinvested into a short duration fund, eliminating the mark-to-market impact on securities lending revenue in periods subsequent to the date of sale.
Northern Trust says higher custody and fund administration fees, however, offset the securities lending declines. Fees from those services increased by 17% to $189.9 million from $161.9 million in Q2 2010. The firm says strong new business, improved markets and the BoISS acquisition contributed to the growth in custody and fund administration revenue.
Northern Trusts solid capital position has enabled us to pursue strategic initiatives, says Frederick H. Waddell, chairman and CEO of Northern Trust. During the second quarter, we completed our acquisition of the fund administration business of Bank of Ireland and announced an agreement to acquire Omnium LLC, a leading hedge fund administrator. These targeted acquisitions provide Northern Trust with new capabilities that position us to better serve our clients and enter new markets to fuel future growth.
Net income per common share was $0.62 for the quarter, down from $0.82 in the same quarter in 2010 and up one penny from $0.61 in the first quarter this year.
Despite new business success in the marketplace, persistently low interest rates and a sluggish economy continued to impact our results, Waddell says. As we said during the second quarter, while continuing to invest in the business, we are actively pursuing a wide array of productivity and expense management initiatives.
(CG)