Oct 22 (Reuters) - Northern Trust ( NTRS ) beat Wall

Street expectations for third-quarter profit on Wednesday as it

earned higher fees after rallying markets boosted the value of

its underlying assets.

Markets rallied through multiple record highs in the third

quarter as AI stocks continued their surge, which along with

lower interest rates and regulation eased concerns about

stagflation and U.S. trade policy.

Northern's assets under custody and administration climbed

5% to $18.25 trillion in the quarter ended September 30. The

corresponding trust, investment and other servicing fees

increased 6%.

Assets under management rose 9% to $1.77 trillion during the

same period.

Net interest income - the difference between what is paid

out on liabilities and earned on assets - rose 5% to $596.3

million. Last week, peer State Street's shares tanked

after missing Wall Street estimates for NII.

Ebullient markets, robust client flows and favorable

currency movements have boosted earnings for the sector.

Last week, BNY also reported higher quarterly profit

as the world's largest custodian bank benefited from higher

interest income and fee revenue.

Northern Trust ( NTRS ) reported profit of $457.6 million, or $2.29

per share, in the third quarter. Analysts, on average, expected

profit of $2.25 per share, according to data compiled by LSEG.