Updated Summary Of Banks', Wealth Managers' Financial Results - Q4, Full-Year 2020

Editorial Staff, 5 March 2021


The group’s global wealth management arm reported a slight quarter-on-quarter dip in pre-tax profit of $936 million in Q4 2020, but it had risen from $766 million a year earlier. Operating income at this portion of the bank stood at $4.277 billion, against $4.28 billion in Q3 2020 and down from $4.150 billion a year ago. Costs rose to $3.341 billion from $3.223 billion in Q3 but dropped a touch from $4.384 billion a year ago. 

Profit growth over the year took place in all regions. Recurring fee income rose by 5 per cent, reflecting a rise in invested assets, but partly offset by lower margins. The cost/income ratio was 78.2 per cent at the end of 2020, narrowing by 3.1 percentage points on a year ago, driven by higher income and a dip in costs. Invested assets rose to a record $3.016 trillion. Net new money was $21.1 billion, helped by inflows in all regions.

Deutsche Bank
The firm’s private banking arm’s pre-tax loss for 2020 narrowed to €124 million ($148.9 million) from €279 million a year earlier, as this part of the group remained in the red as a result of transformation-related costs. Adjusted profit before tax stood at €493 million, down by 3 per cent on a year ago. There were €642 million of transformation-linked effects on the results, Germany’s largest banking group said. For the full year, net private banking revenues were €8.1 billion, down by 1 per cent compared with 2019. Revenues excluding specific items remained stable compared with the prior year, as sustained business growth from net inflows of investment products, net new client loans and repricing measures offset significant interest rate headwinds and the impact of COVID-19. The private banking arm held €493 billion in AuM at the end of 2020.

BNP Paribas
The French group’s wealth and asset management business reported €233 million ($278.9 million) in pre-tax income for the fourth quarter of 2020, rising from €216 million a year earlier, while operating income at €159 million (vs €191 million) fell over the period. It reported a drop in revenues at the wealth and asset management arm, slipping to €826 million from €957 million. Costs narrowed slightly to €669 million from €760 million. Assets under management came to €1.165 trillion at the end of December 2020, rising by 3.8 per cent on a year before, helped by €54.9 billion of net inflow and a rebound in financial markets last year, but offset somewhat by negative foreign exchange movements. There were particularly strong net asset inflows in Asia and Germany. Wealth and asset management revenues (€2.982 million) fell by 10.2 per cent on the year.

It reported a €54 million ($65.5 million) profit for the fourth quarter of 2020, and a loss of €45 million for all of last year. In 2019, the Netherlands-based group, which provides private banking as part of its offerings, logged a Q4 profit of €316 million and a full-year profit of €2.046 billion. Impairment charges on financial instruments – linked to the expected effects of the COVID-19 pandemic – surged in 2020, reaching €2.303 billion, up from €657 million a year earlier. In Q4, such impairments fell, however, to €220 million from €314 million a year earlier. Operating income slipped to €7.916 billion in 2020 from €8.605 billion a year earlier. In Q4, the bank’s cost/income ratio widened to 77.8 per cent from 65.9 per cent a year before. At the end of last year, ABN AMRO’s Common Equity Tier 1 ratio – a standard measure of a bank’s capital strength – was 17.7 per cent, falling a touch from a year ago. At the private bank, the firm had €189.6 billion of client money.

Societe Generale
The European bank reported group net income of €470 million ($570.3 million) for the fourth quarter of 2020, down from €654 million a year ago. For the whole of 2020, it logged a loss of €258 million, down from €3.248 billion, hit by a big rise in net cost of risk and some decline in net banking income. Net cost of risk rose to €3.306 billion from €1.278 billion a year ago, reflecting how banks have adjusted their provisions to deal with the COVID-19 pandemic and expected hit to business. At the end of 2020, the bank had a Common Equity Tier 1 ratio – a standard international measure of capital strength – of 13.4 per cent, around 440 basis points above the regulatory requirement.

Underlying operating costs were substantially lower in 2020 at €16.5 billion, falling by 5.2 per cent from a year ago, and in line with the bank’s target for the full year. Within asset and wealth management, there was a Q4 2020 net loss of €9 million, versus €21 million a year earlier. Private banking assets under management stood at €70.4 billion at the end of last year. Net banking income stood at €676 million in 2020. In the fourth quarter of last year, net banking income fell by 10.5 per cent from a year earlier. Total AuM at the private banking arm stood at €116 billion at the end of December 2020, down from €116 billion a year before.

Credit Suisse
Credit Suisse logged total wealth management-related net revenues, on a reported basis, of SFr13.6 billion ($15.1 billion), down by 8 per cent on a year earlier, driven by higher transaction-based revenues, although offset by lower recurring commissions and fees. Total AuM stood at SFr1.5 trillion.

Adjusted total wealth management-related net revenues, excluding significant items and at constant foreign currency rates, came in at SFr13.9 billion, rising by 2 per cent on a year before, helped by stronger transaction-based revenues. It recorded strong net new assets of SFr42.0 billion across its businesses, with SFr7.8 billion in Swiss Universal Banking, SFr32.2 billion in international wealth management and SFr8.6 billion in Asia-Pacific.

The consumer banking and wealth management division logged a pre-tax profit of S$2.023 billion ($1.052 billion) for 2020, falling from S$2.777 billion a year ago; this was  affected by a rise in allowance for credit and other losses, as well as a drop in net interest income. Allowances for credit and other losses stood at S$456 million in 2020, against S$242 million a year ago. Net interest income stood at S$3.339 billion, down from S$4.037 billion.

For the banking group as a whole, DBS reported net profit of S$4.72 billion for full-year 2020, falling by 26 per cent from the previous year. Total allowances more than quadrupled to S$3.07 billion as general allowances of S$1.71 billion were set aside for potential risks arising from the pandemic. Profit before allowances rose by 2 per cent to S$8.43 billion. At the end of December 2020, the bank’s Common Equity Tier 1 ratio – a standard measure of a bank’s financial strength – was 13.9 per cent, compared with 14.1 per cent a year earlier.

It logged a 2020 pre-tax group profit of £3.1 billion ($4.32 billion), falling from £4.4 billion a year before. Profits attributable to shareholders fell by 38 per cent year-on-year to £1.526 billion. Results were hit by credit impairment charges linked to the COVID-19 pandemic, rising to £4.8 billion from £1.9 billion a year ago. The group doesn’t split out results for its wealth and investment management sector.

Group operating costs, at £13.7 billion, inched up 1 per cent on a year earlier.

Barclays said it had a Common equity tier 1 – a standard international yardstick of a bank’s capital buffer – of 15.1 per cent, rising 130 basis points from a year before, reflecting measures including the bank’s decision to cancel its full-year dividend payment for 2019.

The wealth and personal banking arm – the area including its private bank business – reported an adjusted pre-tax profit of $4.14 billion for 2020, against $8.883 billion a year earlier. The segment’s net operating costs stood at $15.024 billion in 2020, slightly narrower from $15.088 billion a year before. Net operating income was $22.01 billion in 2020, contracting from $25.565 billion a year earlier. Its adjusted cost/efficiency ratio was 68.3 per cent, out from 60.2 per cent. Expected credit losses were $2.855 billion in 2020, up from $1.348 billion. Across the entire UK/Hong Kong-listed group, HSBC’s adjusted pre-tax profit fell to $12.149 billion from $22.149 billion. The private bank had $394 billion in AuM; the entire wealth arm, covering premier and other outlets, had $780 billion in AuM.

Standard Chartered
It reported a 54 per cent slide in the profit attributable to ordinary shareholders of $1.141 billion in 2020, as a 153 per cent surge in credit impairments to $2.294 billion hit the bottom line. Operating income fell by 3 per cent year-on-year to $14,765 billion last year; operating costs, including a UK bank levy, inched up by 3 per cent to $10.142 billion. The bank’s cost/income ratio widened 50 basis points to 66.4 per cent. It logged a Common Equity Tier 1 ratio – a standard international measure of a lender’s capital buffer – of 14.1 per cent, widening by 60 bps from where it stood at the end of 2019. Wealth management income grew by 5 per cent. Standard Chartered said there was a “particularly strong sales performance” in foreign exchange, equities and structured notes driving income. A one-off impairment has hit the private banking result.

The private banking arm, including the Coutts and Adam & Co business lines, reported a fall in operating profit in 2020 to £208 million ($290.8), down from £297 million a year earlier, as impairments linked to the COVID-19 pandemic hit the bottom line. Total income slipped more gently to £763 million from £777 million over the period. Impairments stood at £100 million last year, versus a positive £6 million sum a year before. Return on equity in private banking was 10.3 per cent, down from 15.4 per cent. Costs fell over the year, however, from £486 million to £455 million. The cost/income ratio of the division fell to 59.6 per cent from 62.5 per cent. Assets under management rose, reaching £29.1 billion at the end of December, from $23.2 billion a year earlier. Client deposits were £32.4 billion, from £28.4 billion. 

Lloyds Banking Group
The insurance and wealth arm – a segment including Lloyds’ wealth joint venture with Schroders – was squeezed by the harsh economic conditions of 2020, posting an underlying profit for last year of £338 million ($487 million), falling by 68 per cent on a year earlier. 

Net income fell by 38 per cent year-on-year to £1.299 billion; total costs were marginally lower, at £952 million, narrowing by 8 per cent. The cut in wealth income reflected the transfer of business to the Schroders Personal Wealth JV business in 2019, and lower net interest income caused by very low interest rates. For the Lloyds Banking Group, its statutory pre-tax profit stood at £1.226 billion, falling by 72 per cent year-on-year. Impairments rose sharply as a result of the damage caused by the pandemic and government measures to suppress it, coming in at £4.247 billion, from £1.291 billion. Net income fell by 16 per cent to £14.404 billion.

OCBC, Bank of Singapore
Wealth management fees, which made up close to half of total fee income, were S$250 million. As at December 31, 2020, assets under management at its private banking subsidiary, Bank of Singapore, grew by 4 per cent in Q4 2020 from the previous quarter and 3 per cent from a year before to a record US$121 billion (S$160 billion), driven by continued inflows of net new money and improved market valuations.

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