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Jan 22 (Reuters) - Northern Trust NTRS.O on Thursday reported a rise in fourth-quarter profit as a market rally lifted asset values, boosting fee income.

Investor demand for AI-linked stocks, Federal Reserve rate cuts and easing tariff worries have powered a broad market rally, supporting asset managers and custodians.

Northern Trust's assets under custody and administration climbed 11% to $18.7 trillion in the quarter, while assets under management rose 12% to $1.8 trillion.

Net interest income, the spread between earnings on assets and costs on liabilities, rose 14% in the quarter. Trust, investment and other servicing fees increased 7%.

The company's net income rose to $466 million, or $2.42 per share, in the three months ended December 31, from $455.4 million, or $2.26 per share, a year earlier.

Fees from managing client assets are Northern's main source of revenue. The firm offers wealth management, asset management and banking services to institutions and wealthy individuals.

"Mid-single-digit trust fee growth, double-digit net interest income and disciplined expense management drove positive operating leverage of four points in the fourth quarter and more than two points for the full year, both excluding notables," said CEO Michael O'Grady in a statement.

The results mirror those of peer BNY, which posted higher profit last week.

Northern Trust's shares gained 33.3% in 2025, while peers State Street STT.N and BNY BK.N saw their stock rise 31.4% and 51.1%, respectively.

(Reporting by Prakhar Srivastava in Bengaluru; Editing by Tasim Zahid)

((Prakhar.srivastava2@thomsonreuters.com;))