April 16 (Reuters) - Asset and wealth manager Northern

Trust ( NTRS ) posted a 38% fall in first-quarter profit on

Tuesday as a loss on the sale of some debt investments offset

gains from higher fee income for servicing and managing client

assets.

The company incurred a $189.4 million loss on the sale of

certain debt securities, as it repositioned its portfolio.

It also booked a $12.5 million expense tied to the

replenishment of a government deposit insurance fund, which was

drained after Silicon Valley Bank and Signature Bank failed last

year.

Shares of Northern Trust ( NTRS ) fell 1.2% in premarket trading.

They have dipped 0.8% so far this year, compared to a 3.3% fall

and 5.8% rise for peers State Street and Bank of New

York Mellon ( BK ), respectively.

Northern Trust ( NTRS ) said the 135-year old company's net interest

income (NII) - the difference between what it earns on assets

and pays on liabilities - fell 0.6% to $528.1 million due to

higher deposits costs.

Equity markets have rallied in recent months amid hopes of a

soft landing for the economy, resulting in assets under custody

or administration jumping 16% to $16.47 trillion in the quarter.

Rivals State Street and Bank of New York Mellon ( BK ) also saw

client assets drive up their fee-based income higher.

The company's trust, investment, and other servicing fees

rose 7% to $1.14 billion. Such fees, primarily determined by the

market value of client assets managed and serviced, make up more

than two-thirds of its total revenue.

Foreign exchange trading income rose 8% to $57 million,

driven by higher client volumes.

Chicago, Illinois-based Northern's total revenue fell 5.6%

to $1.65 billion.

The company's earnings allocated to common and potential

common shares fell to $196.1 million, or 96 cents per share, in

the three months ended March 31, from $315.2 million, or $1.51

per share, a year earlier.