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BoA's Wealth Management Net Income Slips

Tom Burroughes

17 February 2024

Net income in the wealth management arm of Bank of America dropped in the fourth quarter of 2023 to $1.019 billion, down from $1.2 billion a year earlier and from $1.033 billion in the third quarter of last year. 

Total revenue also dropped, down to $5.227 billion from $5.41 billion in Q4, 2022, the Charlotte , North Carolina-headquartered bank said in a statement on Friday. Lower net interest income dented revenues. Noninterest costs, at $3.9 billion, rose 3 per cent, driven by revenue-related incentives and higher FDIC expense. 

Total client balances were $3.8 billion, up 12 per cent, driven by rising markets and inflows of client money. About 40,000 new clients – in net terms – came on board. In total, there are 18,916 advisors serving clients across the wealth continuum, up 2 per cent a year ago.

Within the private banking arm, client balances stood at $607 billion; assets under management balances were $360 billion. In Q4 a record of about 630 new client relationships were established, up 16 per cent on a year earlier. As it has done in recent years, BoA made a point of how much digital technology has penetrated the value chain. Some 92 per cent of private bank clients are digitally active, it said.

In the Merrill Wealth Management side of the business, client balances were $3.2 billion, and AuM balances were $1.3 billion. About 6,500 net new households signed up in the quarter.

Group results
Group results, net income fell to $3.1 billion in Q4 2023 from 7.1 billion. Revenue, net of interest cost, dropped by 10 per cent to $22 billion. Net interest income fell 5 per cent, and noninterest income fell, as higher asset management and investment banking fees were offset by lower market making activities. Provision for credit losses rose; there was also a net reserve release. Noninterest costs rose 14 per cent.

BoA was hit by a pre-tax charge of $1.6 billion in the quarter related to the transition away from the London Interbank Offered Rate, the older interbank rate system which has been phased out following a rate-rigging scandal around the world about a decade ago. The results also included a $2.1 billion fee charged by Federal Deposit Insurance Corp. The fee is tied to the failures of Silicon Valley Bank and Signature Bank.