Financial Results
Summary Of Major Banks' Q3 2021 Financial Results
As the Q4/full-year 2021 reporting season kicks into gear, here's a reminder of what major banks reported in the third quarter of last year.
Here is a summary of the results from a range of the major banking groups and some other financial actors around the world. The results focus on the largest institutions which provide wealth management. Not all banks report on a calendar year schedule, and not all the institutions are alike, so the results from standalone institutions such as Julius Baer should be viewed differently from wealth management results embedded within a larger institution. These results may be subsequently revised. Not all the banks reported on the same day, so the exchange rate comparisons with the dollar have been removed. We hope readers find it useful to see these figures collated in one article. To comment, email tom.burroughes@wealthbriefing.com.
Citigroup
Private bank revenues stood at $973 million in the third quarter
of 2021, nudging up by 4 per cent, driven by higher fees and
lending volumes, reflecting momentum with both new and existing
clients, partially offset by lower deposit spreads. Across the
entire banking group, it logged net income $4.6 billion in Q3, on
revenues of $17.2 billion. This compared with net income of $3.1
billion on revenues of $17.3 billion a year earlier. Revenues
fell 1 per cent from the prior-year period, including a pre-tax
loss of about $680 million related to the sale of the Australia
consumer business in global consumer banking.
JP Morgan
The bank announced third-quarter net income of $11.687 billion,
up from $9.44 billion a year earlier. This was helped by a
year-on-year reversal of credit loss provisions, but it fell a
touch from $11.948 billion in the previous quarter of this year.
It logged $29.647 billion in net revenues for the three months to
September 30, up a touch from a year ago but down slightly from
the previous quarter. Provision for credit losses showed a
negative figure – a net release – of $1.527 billion, against a
net provision of $611 million last year as the pandemic continued
to rage. At the asset and wealth management side, net income rose
to $1.194 billion in Q3, up from $876 million a year earlier; net
revenue rose to $4.3 billion from $3.554 billion in the third
quarter of 2020.
Goldman Sachs
Goldman Sachs last Friday reported that net revenues in consumer
and wealth management were $2.02 billion for the third quarter of
2021, rising 35 per cent higher than the third quarter of 2020
and 16 per cent higher than the second quarter of 2021. Net
revenues in this business area of the US firm stood at $1.64
billion, rising 40 per cent from the third quarter of 2020.
Management and other fees were significantly higher, primarily reflecting the impact of higher average assets under supervision. Incentive fees were significantly higher, due to harvesting, and net revenues in private banking and lending were higher, primarily reflecting higher loan balances.
Morgan Stanley
Net wealth management revenues rose to $5.935 billion from $4.654
billion. Fee-based client assets stood at $1.752 trillion, up
from $1.333 trillion a year earlier. There were $134.5 billion of
net new assets, surging from $51.8 billion a year ago –
suggesting a big uptick in investment confidence as the
vaccinations spread and lockdown measures eased off. Wealth
management delivered a pre-tax margin of 25.8 per cent or 27.7
per cent, excluding integration-related expenses.
BNY Mellon
Wealth management revenues stood at $305 million in the third
quarter of 2021, up from $277 million a year earlier, while
pre-tax income was $348 million for its overall wealth and
investment arm. The latter figure rose 42 per cent on a year
earlier. The wealth/investment arm of the US group said its
pre-tax operating margin was 34 per cent in Q3, widening from 27
per cent a year before. Wealth management client assets stood at
$307 billion, up from $305 billion at the end of June last year,
and up from $265 billion a year before. Higher market values
pushed up assets under management.
Northern Trust
It reported $395.7 million in net income for the third quarter of
2021, rising from $294.5 million a year ago, aided by rising
revenues and a reversal of some of last year’s credit loss
provisions. Trust, investment and other servicing fees stood at
$1.111 billion in the latest quarter, up from $1.003 billion in
the same period of 2020. Non-interest costs rose to $1.128
billion, from $1.094 billion.
Assets under management in the wealth business covered by the group stood at $372.9 billion, against $318.5 billion at September 30 last year, Northern Trust said in a statement. Total AuM was $1.532 trillion (with the other assets coming from corporate and institutional services). Total assets under custody/administration were $15.775 trillion, rising 21 per cent year-on-year.
BlackRock
It reported $9.463 trillion of assets under management, up from
$7.808 trillion a year earlier, helped by year-to-date long-term
inflows of $290 billion as well as by rising markets. Revenues
(as measured on a GAAP accounting basis) stood at $5.05 billion,
up from $4.369 billion a year earlier. Net income stood at $1.681
billion, rising from $1.364 billion.
UBS
The global wealth management arm of UBS reported a pre-tax profit
of $1.5 billion in the third quarter of 2021, up a touch from
$1.507 billion a year earlier and continuing a broadly positive
trend for its results. Operating income increased by 17 per cent
year-on-year. Recurring net fee income increased by 23 per cent,
primarily driven by higher average fee-generating assets,
reflecting positive market performance and net new fee-generating
assets. Net interest income increased by 15 per cent, on higher
loan revenues from higher volumes and margins, as well as higher
deposit revenues.
Fee-generating assets were slightly down sequentially to $1.412 trillion. Net new fee-generating assets were $18.8 billion, supported by inflows in nearly all regions, and represented an annualized growth rate of 5 per cent in the quarter. Total invested assets as at the end of September were $3.2 trillion. The cost/income ratio declined 69.8 per cent, down 5.8 percentage points year-on-year, as income increased by 17 per cent and operating expenses increased by 8 per cent driven by financial advisor variable compensation.
Credit Suisse
Net income, attributable to shareholders, of SFr434 million in
the third quarter of 2021, was down 21 per cent year-on-year. Net
revenues rose 5 per cent to SFr5.437 billion; provision for
credit losses swung into a net release of SFr144 million, as
economic conditions improved. On an adjusted basis, excluding
significant items and the Archegos impact, the bank logged a 25
per cent year-on-year rise in pre-tax income, at SFr1.362
billion.
As part of a restructuring to the whole business, Credit Suisse said: “We plan to exit approximately 10 non-core markets. The division expects to hire approximately 500 relationship managers over the next three years, which represents an increase of about 15 per cent from 2021 to 2024. Investments in technology are expected to increase by approximately 60 per cent in 2024 versus 2021.”
Julius Baer
The bank said assets under management rose to SFr484 billion at
the end of October 2021, a year-to-date increase of 12 per cent.
The increase was driven by continued net new money inflows (4.4
per cent on an annualized basis) as well as positive stock market
performance and currency movements. The gross margin for the
first ten months of 2021 was slightly above 82 basis points. The
decline from the 88 bps reported for the full year 2020 reflects
a “softening” in client activity from the “exceptionally high
levels” the bank witnessed last year when the pandemic broke out.
The bank’s BIS Common Equity Tier 1 capital ratio rose to 16.7
per cent at the end of October 2021 (end 2020: 14.9 per cent).
Vontobel
The firm said its pre-tax profit for the first nine months of
2021 was “significantly higher” than in the prior-year period. It
logged a 4.3 per cent growth in net new money and advised assets
grew 16 per cent year-on-year to SFr266 billion. Wealth
management net new money rose 6.4 per cent year-on-year,
exceeding the firm’s target. Overall, wealth management clients
put SFr3.9 billion of new money into the firm over the nine-month
period.
Deutsche Bank
It reported a slight year-on-year (-2 per cent) drop in total net
revenues, reaching €1.999 billion in the three months to 30
September. As with other banks, a provision for credit losses
expected from the pandemic last year narrowed from €174 million
to €92 million. Pre-tax profits stood at €158 million in Q3, from
zero a year ago. Assets under management were €541 billion, by
€65 billion from a year ago, and net flows were €6 billion,
versus €5 billion in Q3, 2020. The Frankfurt-listed firm’s
figures also show that its total number of private bank employees
fell to 28,927, shrinking by 1,757 from a year ago.
HSBC
It reported that after-tax profit for the third quarter of 2021
surged to $4.2 billion from $2.2 billion due to a release of
expected credit losses and other impairment charges as the
pandemic conditions eased. All regions earned a profit, with Asia
contributing $3.3 billion to the pre-tax reported profit; the UK
reported a pre-tax profit rise of $1.0 billion to $41.5 billion.
The bank logged a net release of $700 million in Q3, against an
expected charge last year of $800 million, helped by stability in
economic conditions and better-than-expected credit
performance.
Within the wealth and personal banking arm, HSBC logged net operating income of $16.8 billion in the nine months to September 30, down from $17.264 billion. For the quarter, the figure was $5.418 billion, down from $5.57 billion. Within the wealth side, private banking revenue was $442 million in Q3, up from $424 million.
Lloyds Banking Group
It reported an underlying profit after impairments of £2.19
billion for the third quarter of 2021, jumping 88 per cent
year-on-year, helped by a switch from impairments a year ago as
the pandemic eased. There was an impairment credit of £84 million
in Q3, against a charge of £301 million in Q3, 2020. Total cost
declined 2 per cent, while net income of £4.077 billion rose 20
per cent.
The bank’s cost/income ratio narrowed to 48.3 per cent from 56.9 per cent. Return on tangible equity rose sharply to 14.5 per cent from 6 per cent. At the end of September its Common Equity Tier 1 ratio – a standard international measure of capital strength – was 17.2 per cent, up from 16.2 per cent at the end of 2020.
NatWest Group
The private banking arm of the group, covering the Coutts brand,
reported a £94 million operating profit for the third quarter of
2021, rising from £57 million a year earlier and £82 million in
the previous quarter. Assets under management and administration
rose by 18 per cent from a year earlier to £35.7 billion; assets
under management reached £30.5, up from £27 billion.
Total costs stood at £116 million in Q3, up from £112 million a year before but down from £128 million in the three months to the end of June. As shown with other banks, Coutts swung from an impairment loss a year ago because of the pandemic (-£18 million) to a release of £15 million in the latest quarter. The cost/income ratio stood at 59.5 per cent in Q3 2021, down from 59.9 per cent a year before.
BNP Paribas
Its wealth, insurance and asset management arm said its total
assets under management rose 4.5 per cent from the end of last
year to €1.218 trillion as at end-September 2021. The gain in AuM
was mainly driven by a “performance impact” of €40 billion,
caused by rising market levels and management skills. A foreign
exchange rate effect boosted the AuM number by €11.8 billion. The
group said there were strong net asset inflows in its European
wealth arm, especially in Germany, France and Italy, as well as
Asia.
At €859 million, wealth and asset management revenues rose by 17.0 per cent compared with the third quarter 2020 and were up in all businesses. They were driven by higher fees and loan revenues at wealth management, the impact of strong net asset inflows and the performance impact at asset management and the sharp increase at real estate services, particularly in advisory.
Societe Generale
It reported that private banking net income, at €153 million,
fell by 7.3 per cent on a year before. Revenues were hit by
market conditions and weaker activity. Assets under management
were stable at €114 billion, and net inflows stood at €1.8
billion in the first nine months of the year, driven by the
French business. Net banking income at its wealth and asset
management arm totaled €210 million in the third quarter of this
year, falling by 3.7 per cent on a year ago.
ABN AMRO
The Netherlands-based group providing services including private
banking, reported a €343 million profit for the third quarter of
this year, rising by 14 per cent from a year ago. The result was
boosted significantly by a swing from impairment charges last
year amid the pandemic to a net release in the latest quarter.
Operating income stood at €1.734 billion in Q3 2021, falling 21
per cent year-on-year; operating costs fell 4 per cent
year-on-year to €1.301 billion. The bank said it had a €12
million net release in the third quarter, against €270 million of
impairment charges in Q3 2020.
DBS
Wealth management fees rose to S$461 million in the third quarter
of this year from S$399 million a year ago, with higher activity
across a range of investment products. For the first nine months
of 2021, fee income rose to S$1.406 billion from S$1.141
billion.
For DBS Group as a whole, profit held stable in the quarter at S$1.7 billion and rose 31 per cent on a year ago. Total income of $3.561 billion dipped 1 per cent from the previous quarter. Costs rose 8 per cent on the quarter to S$1.668 billion.
OCBC
Oversea-Chinese Banking Group, the parent of Bank of Singapore,
reported a group net profit of S$1.224 billion for the three
months to the end of September, up from S$1.028 billion a year
ago. That result was driven by S$2.56 billion in total income, up
from S$2.539 billion. Operating costs rose to S$1.88 billion from
S$1.098 billion. OCBC’s wealth management income – from
insurance, premier and private banking, asset management and
stockbroking – was S$897 million and made up 35 per cent of the
group’s income in the third quarter. At September30, 2021, Bank
of Singapore’s assets under management rose by 6 per cent from a
year ago to S$167 billion, driven by continued inflows of net new
money and positive market valuations.