Bank of America produced a robust set of results across its wealth management business for the second quarter of this year.

Bank of America’s global wealth and investment management arm today reported record revenue in the second quarter of this year of $4.6 billion, up from $4.499 billion in the same period a year ago, and up from $4.547 billion three months earlier.

In its results statement, Bank of America said net income at the GWIM division stood at $724 million, a fall from $759 million a year earlier. Total assets under management were $878.7 billion, up from $841.8 billion at the end of March and up from $743.6 billion a year earlier.

This division logged a pre-tax margin of 25.1 per cent, which is the sixth consecutive quarter where the margin has been 25 per cent or over.

There was a $8 million provision for credit losses in the latest quarter, narrower than the $15 million figure a year earlier.

Asset management fees were $1.95 billion, up 15 per cent, the US-listed banking group said.

Over the past year, BoA has spun off its non-US wealth management arm to Switzerland’s Julius Baer and the Zurich-listed bank has been in the process of switching over client accounts in recent months.

Second-quarter long-term assets under management flows of $11.9 billion were the 20th consecutive quarter of positive flows, the bank said.

Merrill Lynch Revenue increased by $49 million to $3.8 billion, due to higher fee-based revenue from the markets and flows.  Results are 1.3 per cent higher than prior year and 7 per cent higher than prior quarter. The number of financial advisors rose by 120 for the quarter; current headcount is 13,845 at that part of the Merrill Lynch business. Financial advisor productivity stood at $1.34 million per experienced advisor, a 7 per cent rise over the prior quarter; total FA productivity stood at $1.06 million, BoA said.

Group results
Group results fell sharply, however. For the banking group as a whole, BoA reported net income of $2.3 billion, or $0.19 per diluted share, for the second quarter of 2014, compared to net income of $4.0 billion, or $0.32 per diluted share, in the year-ago period. Revenue, net of interest expense, on an FTE basis declined 4 percent from the second quarter of 2013 to $22.0 billion.

"The economy continues to strengthen, and our customers and clients are doing more business with us," chief executive Brian Moynihan said.

"Among other positive indicators, consumers are spending more, brokerage assets are up by double digits and our corporate clients are increasingly turning to us to help finance business expansion and merger activity. We are well positioned for further progress,” he added.
Shares in BoA were down 2.25 per cent in mid-morning New York trade. AIG settlement
On July 15, BoA carried out a “definitive settlement agreement” with AIG, the insurance and financial service firm, to resolve all outstanding residential mortgage-backed securities litigation between the parties. Under the terms of the settlement, AIG will file notices of dismissal in its securities lawsuits against Bank of America and its affiliates pending in California and New York federal courts. Also, AIG has agreed to withdraw its objection to the Bank of New York Mellon private-label securities settlement.

The AIG settlement amount of $650 million was covered by litigation reserves as of June 30. BoA said it has resolved about 95 per cent of the unpaid principal balance of all RMBS as to which RMBS securities litigation has been filed or threatened for all Bank of America-related entities.

In addition, the parties agreed to settle three actions brought by BoA seeking to collect mortgage insurance proceeds due from AIG’s United Guaranty mortgage insurance subsidiaries on legacy Bank of America originated and serviced loans.

US Trust
Commenting its US Trust arm, BoA said second-quarter revenue was $783 million,  the highest quarter since the merger of that firm. Q2 asset management fees were $413 million, up 9 per cent from the same quarter last year, and a record level. The firm said there had been a 100 per cent retention of top-tier private client advisors during the first half of this year..

UST client balances ended the quarter at $383 billion, up $29 billion higher than Q2 2013.