Northern Trust Corporation (NTRS”>NTRS) is on track to grow its asset servicing business in the Nordic region by winning a NOK606 million (about $110 million) mandate to offer global custody, securities lending, transition management, and foreign exchange services to the municipal investment fund of Bærum Kommune in suburban Oslo, Norway.
Northern Trust, which has been serving the needs of its Nordic region clients for 20 years, is now focused on increasing its business and broadening its client base in the region. The mandate offers the company with the perfect opportunity to achieve its goal. The company’s Nordic headquarters in Stockholm was opened in September 2009 to provide asset servicing products and services to Nordic clients.
Last month, Northern Trust reported second-quarter 2011 earnings of 70 cents per share, surpassing the Zacks Consensus Estimate by a penny. The upside emanated from higher net interest income, a growth in assets under management and an improved client network.
The company has made investments in businesses to serve its clients in the U.S. and around the world. In July, Northern Trust completed the acquisition of Omnium LLC, a leading hedge fund administrator, from Citadel. The take over of Omnium, which has around $70 billion in assets under administration, would enhance Northern Trust’s capabilities and create an industry-leading hedge fund administration platform for institutional investors.
In June 2011, Northern Trust completed the acquisition of Bank of Ireland Securities Services (BoISS) from Bank of Ireland Group (IRE”>IRE). Through this acquisition, Northern Trust expects to combine its fund administration business with the existing activities in Ireland and offer outstanding consumer service and solutions to clients.
These acquisitions will likely improve and expand Northern Trust’s Global Fund Service capabilities, particularly in fund administration and ETFs. Besides these, the company is also spreading out its services in Australia.
We expect increased asset management and servicing fees based on improvements in equity markets and higher volumes. The recent acquisitions depict a strong financial position of the company. The company is also poised to benefit from the growth in client network. However, the continuing low interest environment and a slow economic recovery will expectedly affect results in the upcoming quarters. Further, the Dodd-Frank Act will ring in numerous regulatory changes over the next several years, which might act as a deterrent to the company’s fundamentals.
Northern Trust currently retains its Zacks #3 Rank, which translates into a short-term ‘Hold’ rating. Also considering the fundamentals, we are maintaining our long-term “Neutral” recommendation on the stock.
IRELAND BK-ADR (IRE): Free Stock Analysis Report
NORTHERN TRUST (NTRS): Free Stock Analysis Report
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