Net Income Drops At BoA's Global Wealth, Investment Division

Tom Burroughes

16 April 2020

Bank of America’s global wealth and investment management division yesterday reported a 17 per cent year-on-year slide in net income, reaching $866 million in the first quarter of 2020, as “solid” client activity was more than outweighed by a reserve build linked to the coronavirus pandemic.

Pre-tax income fell to $1.1 billion, also a fall of 17 per cent on the same quarter a year earlier, , has reported how the reserve build-up to handle the virus impact on markets has dented headline results.

Revenues rose by 2 per cent to $4.9 billion, reflecting higher asset management and brokerage fees, with lower interest rates partly offsetting those forces, it said. Provision for credit losses rose sharply to $189 million from just $5 million a year earlier.

Total client balances stood at $2.659 trillion at the end of March this year, against $2.837 trillion a year before, reflecting the fall in markets in March as the pandemic threw economies into disarray. There were $7.0 billion of AuM flows in the quarter, against $5.9 billion a year earlier.

BoA said that client growth in the quarter was “strong”; Merrill added more than 7,500 net new households as clients and referrals to/from Merrill surged by 52 per cent on a year earlier, and the private bank added more than 600 net new relationships.

Across the whole of the BoA business lines, pre-tax income fell by 48 per cent to $4.5 billion in Q1 from a year earlier. Provision for credit losses rose to $4.8 billion, driven by a $3.6 billion reserve build.

“Our results reflect the strength of our balance sheet, the diversity of our earnings, and the resilience of our team-mates to serve clients around the world. Despite increasing our loan loss reserves, we earned $4 billion this quarter, maintained a significant buffer against our most stringent capital requirement, and ended the quarter with more liquidity than when we began,” chairman and chief executive Brian Moynihan said.

The group’s Common Equity Tier 1 ratio – a standard way for banks to measure their capital buffer – was 10.8 per cent at March 31, slightly lower than previously.