Financial Results

BofA, BNY Mellon Show Stronger Results, Drop At Goldman Sachs

Wendy Connett Editor 20 October 2010

BofA, BNY Mellon Show Stronger Results, Drop At Goldman Sachs

Some of the world's biggest wealth management players, Bank of America and Bank of New York Mellon, reported generally stronger figures for the third quarter, while Goldman Sachs reported a setback to its earnings, figures showed yesterday.

Bank of America’s third quarter net income in its Global Wealth and Investment Management unit increased $79 million, or 34 per cent, to $313 million from a year earlier driven by lower credit costs and higher non interest income, partially offset by higher non interest expense. Net income in the second quarter was $356 million.

Revenue increased $200 million from a year earlier to $4.1 billion. The increase was driven by higher asset management fees and the absence of support for certain cash funds in the prior year, partially offset by lower brokerage income, the bank said. Revenue in the third quarter was down from the second quarter, which produced $4.3 billion. 

Assets under management fell to $624 billion from $739 billion a year earlier, but were up from $603 billion in the last quarter.

Total net client balances reached $2.1 trillion, up from $2 trillion in the second quarter. Wealth management clients added $14 billion of deposits and $6 billion in long-term assets under management flows in the third quarter.

Assets under management and total net client assets include the Columbia Management long-term asset management business through the date of sale on May 1, 2010.

Merrill Lynch Global Wealth Management netted 5,201 new households with $250,000 or more, up slightly from 5,156 in the second quarter.

The provision for credit losses decreased $387 million from a year ago to $128 million, driven by lower reserve additions and net charge-offs in the consumer real estate and commercial portfolios, along with the absence of a prior-year single large commercial charge-off. Non-interest expense increased from a year ago due primarily to higher revenue-related expenses, personnel costs and higher litigation and support costs.

The bank said that during the third quarter it maintained flat expenses as it repositioned resources to increase talent in wealth management and internationally in global markets.  The bank’s Merrill Lynch unit had 15,340 financial advisors in the third quarter, up from 15,142 in the second.

Bank of America as a whole reported a net loss of $7.3 billion including a non-cash, non-tax deductible goodwill impairment charge of $10.4 billion. Excluding this charge, net income was $3.1 billion, compared with a net loss of $1 billion in the third quarter of 2009.

BNY Mellon

Bank of New York Mellon Corporation’s asset and wealth management revenue was $36 million in the third quarter, up from $29 million in the second quarter. Year-to-date revenues are $90 million.

Assets under management rose 18 per cent year-to-date to $1.141 trillion as of September 30 and 9 per cent during the third quarter. Net long-term inflows were $11 billion, while net short-term inflows were $18 billion.

Asset and wealth management fees were $696 million - an increase of 5 per cent compared with the prior year period.  The increase reflects the impact of acquisitions, improved market values and net new business, the bank said. 

Overall, Bank of New York Mellon reported a profit of $622 million compared with a loss of $2.43 billion in the third quarter of 2009, and income of $668 million in the second quarter of 2010.

Goldman Sachs

Goldman Sachs reported net revenues of $8.9 billion and net earnings of $1.9 billion for the third quarter, a 40 per cent drop from a year earlier.

Net revenues in asset management and securities services were $1.4 billion, 3 per cent lower than the third quarter of 2009 and 2 per cent higher than the second quarter of 2010.

Net revenues in asset management were $1.02 billion, 5 per cent higher than the third quarter of 2009, reflecting higher management and other fees and higher incentive fees.  During the third quarter of 2010, assets under management increased $21 billion to $823 billion, due to $34 billion of net market appreciation, primarily in equity and fixed income assets, partially offset by $13 billion of net outflows, primarily in equity and money market assets. 


Register for WealthBriefing today

Gain access to regular and exclusive research on the global wealth management sector along with the opportunity to attend industry events such as exclusive invites to Breakfast Briefings and Summits in the major wealth management centres and industry leading awards programmes