Jan 18 (Reuters) - Asset and wealth manager Northern Trust on Thursday posted a 27% drop in fourth-quarter profit on lower net interest income and a string of charges.

The bank said it had recorded a special assessment fee of $84.6 million tied to the Federal Deposit Insurance Corp's (FDIC) deposit insurance fund and a loss of $176.4 million on the sale of debt securities during portfolio repositioning.

The FDIC fund, which insures customer deposits in case of a bank failure, was drained of $16 billion following the collapse of two banks in early 2023 and now requires most major financial institutions to replenish it.

Net interest income, the difference between what it earns on assets and pays on liabilities, fell 9% to $501.1 million from a year earlier.

Higher funding costs and lower average earning assets have squeezed the interest income of institutions like Northern Trust in a high interest rate environment.

Net profit came in at $113.1 million, or 52 cents per share, for the three months ended Dec. 31, compared with $155.7 million, or 71 cents per share, a year earlier.

The bank's trust, investment and other servicing fees for the quarter rose 5% to $1.09 billion.

Total assets under the custody or administration of Northern Trust rose 13% to $15.40 trillion from a year earlier.

(Reporting by Pritam Biswas in Bengaluru; Editing by Anil D'Silva)