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Summary Of Wealth Management, Private Banking Results For Q2
Tom Burroughes
2 August 2013
Here is an updated
global summary of financial results so far private banks and wealth management firms. In
certain cases, the institutions are part of larger organizations, so the data
is not always strictly comparable. Also bear in mind that the figures may be
revised at a later date. Results in general
showed stronger performance in the second quarter of 2013 and the first half of
the year. Morgan Stanley The firm, which recently sold off part of its non-US wealth
arm, reported that pre-tax income from continuing wealth management operations
soared 60 per cent to $655 million at the end of June 2013, up from $410
million a year ago. During this year's second quarter, pre-tax income rose 10
per cent from $597 million. Net revenues for Q2 2013 at Morgan Stanley's wealth
management division were $3.5 billion up from $3.2 billion a year ago, but
basically unchanged since the first quarter of the year . Total wealth management client assets totaled
$1.8 trillion at June 30, 2013, while client assets in fee-based accounts were
$629 billion, or 35 per cent of total client assets. Wells Fargo Net income at the wealth, brokerage and retirement division
of the bank rose 29 per cent to $434 million in the second quarter of 2013, as
total revenue increased 2 per cent to $3.3 billion. Year-on-year, net income
rose 27 per cent from $343 million, while total revenue was up 10 per cent. The
10 per cent hike in revenue was driven by strong growth in asset-based fees and
increased brokerage transaction revenue, partially offset by reduced securities
gains in the brokerage business. Quarterly revenue growth was predominantly due
to higher asset-based fees and net interest income, partially offset by lower
gains on deferred compensation plan investments . JP Morgan Revenue from private banking was $1.5 billion in the second
quarter of 2013, up 11 per cent year-on-year, while client assets rose 10 per
cent to $2.2 trillion over the same period. Assets under management ended the
second quarter at $1.5 trillion, an increase of $123 billion , from
a year earlier. This increase was due to net inflows to long-term products and
the effect of higher market levels, partially offset by net outflows from
liquidity products. Bank of America Net income at the firm’s Global Wealth & Investment
Management division rose by 38 per cent from the second quarter of 2012 to $758
million as at June 30, 2013. Net income at the GWIM unit rose $38 million from
$720 million during this year’s second quarter. The pre-tax margin was a
“record” 28 per cent for Q2 2013, up from 21 per cent in the year-ago quarter. Revenue
at end-June 2013 was up 10 per cent from the year-ago quarter to $4.5 billion,
which BoA attributed to higher asset management fees related to higher market
levels and long-term AuM flows, along with higher transactional revenue and
higher net interest income. Goldman Sachs Net revenues were $8.61 billion for the second quarter
ending June 30, 2013, down 15 per cent from $10.09 billion in the first
quarter, but up 30 per cent year-on-year. The firm said net earnings fell from
$2.26 billion in the first quarter of 2013 to $1.93 billion, a decrease of 15
per cent. However, net earnings were up 7 per cent on the previous year. Net revenues in investment management were
$1.33 billion for the second quarter, essentially unchanged compared with the
second quarter of 2012 and the first quarter of 2013. Citigroup Private banking revenues rose 9 per cent year-on-year from
$591 million in Q2 2012 to $645 million this second quarter-end. The private
banking business logged growth across all regions, primarily driven by
investment products. Compared to the first quarter of the year, private banking
revenues are up 3 per cent from $629 million. Brokerage and asset management revenues -$20 million,
compared to $87 million in the second quarter of 2012, reflecting lower Morgan
Stanley Smith Barney joint venture-related revenues. Citigroup completed the
sale of its remaining 35 per cent stake in the MSSB joint venture in June. BNY Mellon Assets under management stood at $1.43 trillion at June 30,
2013, an increase of 10 per cent compared with the prior year and a slight
increase sequentially. The year-over-year increase primarily resulted from net new
business and higher market values. Sequentially, net new business was primarily
offset by lower fixed income market values. It reported second-quarter net
income applicable to common shareholders of $833 million, or $0.71 per diluted
common share, compared with income of $466 million, or $0.39 per diluted common
share, in the second quarter of 2012 and a loss of $266 million, or $0.23 per diluted
common share, in the first quarter of 2013. Northern Trust Net income rose 6 per cent from $179.6 million in the second
quarter of 2012 to $191.1 million at June 30, 2013, with trust, investment and
other servicing fees up 8 per cent from a year ago. Since the end of this
year’s first quarter, net income has shot up 17 per cent from $164 million.
Consolidated revenue of $1.02 billion in the current quarter was up $32 million
– 3 per cent – from $988.5 million in Q2 2012. Non-interest income, which
represented 78 per cent of revenue, increased $66.0 million, or 9 per cent, to
$800.4 million from the prior year quarter’s $734.4 million. This primarily
reflects higher trust, investment and other servicing fees and increased
foreign exchange trading income. Total assets under management slipped from
$810.2 billion at the end of March 2013 to $803 billion as at June 30, 2013,
although AuM is up 14 per cent year-on-year. UBS The bank reported a record profit for its Wealth Management
Americas division in the second quarter of 2013 and the wealth arm covering
other regions reported the highest profit in four years excluding charges
linked to a recent Swiss-UK tax agreement and restructuring costs. Wealth
Management’s profit before tax in the second quarter was SFr557 million , down from SFr664 million in the prior quarter. Adjusted profit before
tax decreased by SFr83 million to SFr607 million and included a charge of
SFr104 million in relation to the Swiss-UK tax agreement. Excluding also this
charge, profit before tax was SFr711 million, a rise of SFr21 million from the
previous quarter. Operating income in the Wealth Management segment stood at
SFr1.953 billion compared with SFr1.913 billion in the prior quarter. The gross
margin on invested assets decreased 1 basis point to 90 basis points as average
invested assets increased faster than income, UBS said. The cost/income ratio increased to 71.5 per cent from 64.9
per cent. Adjusted for restructuring costs of SFr50 million in the second
quarter and SFr26 million in the prior quarter, the cost/income ratio increased
to 69.0 per cent from 63.6 per cent and was within the firm’s target range of
60 per cent to 70 per cent. Wealth Management Americas’ profit before tax was $258
million compared with $251 million in the prior quarter. Adjusted for
restructuring charges, profit before tax increased by $7 million to $269
million from $262 million. Operating income was $1.792 billion compared with
$1.737 billion in the prior quarter. Operating expenses were $1.534 billion
compared with $1.486 billion. Net new money inflows declined to $2.8 billion
from $9.2 billion, partly reflecting client withdrawals of around $2.5 billion
associated with annual income tax payments. Credit Suisse Private banking and wealth management pre-tax income at
Credit Suisse stood at SFr917 million in the second quarter of
2013 , up from SFr881 million in the previous three months
but down from SFr977 million a year ago. The cost/income ratio at this part of
Credit Suisse was 71.9 per cent at the end of June this year, a touch higher
than a year ago . Net revenues were SFr3.424 billion in the
latest quarter, up from SFr3.398 billion in the same quarter a year ago. The
private banking and wealth management arm reported SFr46 million in provisions
for credit losses in Q2, compared with SFr40 million in the same quarter of
2012. Julius Baer Julius Baer, which has been transferring over assets
acquired from its purchase of the non-US wealth business of Bank of America
Merrill Lynch, said total client assets at end-June stood at SFr304 billion
, a 10 per cent gain since the end of 2012. Assets under
management rose by 15 per cent – SFr28 billion – to SFr218 billion, of which
SFr24 billion came from the acquired BoA Merrill business. Based on
figures since the end of June, Julius Baer said the integration of the acquired
business is “advancing rapidly across multiple locations”. After the end of
June, total acquired AuM stood at SFr47 billion. EFG International The bank made a net profit attributable to ordinary shareholders
of SFr83.8 million in the first half of 2013, up by 71 per cent
compared with a year earlier, boosted by the sale of its remaining stake in EFG
Financial Products. Revenue-generating assets under management stood at SFr76.0
billion, compared with SFr78.7 billion at end-2012, but up 4 per cent after
adjusting for exited businesses and reclassifications. The firm has shed a
number of business units and cut costs in recent months, restructuring
operations to get back into profitability after a period of lacklustre results. Societe Generale Its private banking, global investment management and
services division reported net banking income of €501 million
in the second quarter of 2013, a rise of 10.5 per cent year-on-year, and €958
million in the first six months of the year, a rise of 3.7 per cent from a year
earlier. Revenues were underpinned by the recovery in private banking - up 35.8
per cent in the latest quarter from a year ago, at €230 million. This trend
resulted in a significant increase in the gross margin to 106 basis points vs
82 basis points in Q2 2012. At the end
of June, assets under management at the private bank fell €3.4 billion from the
previous quarter, including an outflow of €600 million and a market effect of
€2.4 billion. BNP Paribas Its investment solutions arm – which contains its wealth
management business – logged a pre-tax income of €564 million
for the last quarter, a rise of 6.4 per cent on the same three months of 2012. Revenues
at this segment stood at €1.598 billion, a gain of 2.0 per cent from a year
before. Within the wealth and asset management segment, the firm logged
revenues of €702 million, down slightly from the year-ago figure of €710
million; pre-tax income was €188 million, down from €195 million. Assets under
management1 totalled €869 billion at the investment solutions arms, as at 30
June 2013, falling 2.2 per cent compared to 31 December 2012 but stable
compared to the level as at 30 June 2012. Emirates NBD The bank logged a net profit for the second quarter of this
year of AED972 million , up 16 per cent from AED837 million in
the first quarter. Total income was AED2.9 billion, up 11.5 per cent from the
first quarter. Customer deposits stood at AED230.4 billion, up 3 per cent from
AED223 billion at the end of the first quarter. Lloyds Banking Group In the wealth, asset finance and international segment – a
unit including private banking – Lloyds logged an underlying loss of £101
million, narrowing from a £706 million loss, down 86 per cent, a year before.
The narrower loss was “primarily due to a £541 million reduction in
impairments, strong banking net interest margins and lower costs, partially
offset by a fall in income as a result of the balance sheet reduction together
with the impact from the sale of approximately 37 per cent of St James's Place”,
Lloyds said. . Royal Bank of Scotland The wealth arm reported an operating profit before
impairments in the six months to 30 June of £119 million , down
from £126 million in the same period a year ago. The cost/income ratio of the
wealth business was 78 per cent in the half-year period, down from 79 per cent
a year earlier. Total income was £545 million, down from £593 million in the
six months to 30 June 2012. Assets under management – excluding deposits –
stood at £31.1 billion, up from £30.8 billion at the end of March; customer
deposits stood at £38.0 billion, down from £39.6 billion at the end of March. Barclays The Wealth and Investment Management segment logged a
second-quarter pre-tax, adjusted loss of £13 million ,
contrasting with a profit of £60 million in the previous quarter and a profit
of £49 million a year ago. In the six months to 30 June, this business unit
made an adjusted pre-tax profit of £47 million, contrasting with a £175 million
profit figure in the six months to the end of December last year. DBS Wealth management income at DBS, Singapore’s biggest bank, held
broadly unchanged at S$229 million in the second quarter of
this year compared with a Q1 figure of S$230 million, while assets under
management in this business segment held steady at S$122 billion. DBS has,
meanwhile, said its agreement to buy Temasek Holdings' 67.37 per cent stake in
Danamon, held by a unit of Temasek's Fullerton Financial Holdings, will lapse
after 1 August. With the Bank Danamon deal now dead the opportunity to
quickly add a substantial chunk of Indonesian assets has passed. However, DBS
chief executive Piyush Gupta said that with 39 branches across 11 cities in Indonesia and
through increased technology and additional hiring the DBS Wealth Management
business in the archipelago would organically grow. For the banking group as a
whole, DBS Group Holdings delivered record half-year earnings of S$1.84 billion
for the first six months of 2013, up 5 per cent from a year ago.