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Updated Summary Of Banks', Wealth Managers' Financial Results - Q4, Full-Year 2020
5 March 2021
Citigroup At the private bank, AuM at the end of 2020 stood at $550 billion. JP Morgan Investment and wealth management pre-tax income rose by 30 per cent to $311 million, and assets under management stood at $2.2 trillion at the end of December, rising by 15 per cent from the end of 2019. Wealth management client assets rose by 8 per cent to $286 billion. BlackRock In the second quarter of 2020 PNC divested its entire 22.4 per cent equity stake in BlackRock. Net proceeds from the sale were $14.2 billion. UBS Societe Generale Barclays Group operating costs, at £13.7 billion, inched up 1 per cent on a year earlier.
The firm reported net income for the fourth quarter 2020 of $4.6 billion, on revenues of $16.5 billion, down from of $5.0 billion, and revenues of $18.4 billion for the same quarter in 2019.
Private bank revenues at the US-listed bank were $894 million, rising by 6 per cent on a year ago, driven by “strong client engagement,” particularly in capital markets, as well as improved managed investments revenues and higher lending
For all of 2020, Citigroup reported net income of $11.4 billion on revenues of $74.3 billion, compared with net income of $19.4 billion on revenues of $74.3 billion for the full year 2019.
The asset and wealth management arm, which includes its private bank, reported a fall in net income for the fourth quarter of 2020, at $786 million, against $801 million a year earlier, or down by 10 per cent. Assets under management rose, however. Net revenues at this division rose to $3.867 billion, up by 9 per cent year-on-year, in Q4. Non-interest costs rose by 13 per cent on a year ago to $2.756 billion.
Revenues were driven by higher performance and management fees as well as higher deposit and loan balances. This was offset partly by compressed deposit margins. Assets under management stood at $2.7 trillion, a rise of 17 per cent, driven by cumulative net inflows into liquidity and long-term products, as well as rises in market levels. There was $33 billion into long-term products and outflows of $36 billion from liquidity products in the quarter.
In total, there were 6,876 wealth management client advisors at the end of 2020, up from 6,615 a year earlier. The wealth and asset business at the US bank had a pre-tax margin of 28 per cent. JP Morgan said it had the best full-year results ever for asset and wealth management revenue, net income, total client asset flows, among other metrics. For JP Morgan as a whole, net income rose to $12.13 billion, from $8.52 billion a year earlier. Non-interest costs fell slightly to $16 billion, down from $16.3 billion a year earlier.
It reported a 13 per cent rise in net earnings, applicable to common shareholders, at $8.915 billion in the year ending December 31. Total net revenues last year came in at $44.56 billion, up from $36.546 billion a year ago. Provision for credit losses rose by about three times in 2020 amid fears about the impact of the global pandemic, standing at $3.098 billion in 2020, up from $1.065 billion in 2019. Pre-tax earnings rose by 18 per cent year-on-year reaching $12.479 billion.
Within the consumer and wealth management business division, wealth management revenues were $1.305 billion in the fourth quarter of 2020, up from $1.18 billion a year earlier and up from $1.165 billion in the third quarter of 2020. Private banking and lending net revenues rose to $242 million in Q4, 2020, up from $194 million a year earlier. For the full year, net revenues in wealth management were $4.78 billion, rising 10 per cent higher than 2019, primarily reflecting higher management and other fees, the impact of higher average assets under supervision, higher transaction volumes and the impact of the full-year consolidation of GS Personal Financial Management; this was partially offset by a lower average effective management fee due to shifts in the mix of client assets and strategies.
Firm-wide assets under supervision increased $286 billion during the year to a record $2.15 trillion.
Its acquisition last year of discount E*TRADE, one of the largest such wealth management deals in years, helped propel its earnings for 2020. It reported net revenues of $13.6 billion for the fourth quarter ended December 31, 2020 compared with $10.9 billion a year ago. Net income applicable to Morgan Stanley was $3.4 billion, or $1.81 per diluted share, compared with $2.2 billion, or $1.30 per diluted share, for the same period a year ago.
The E*TRADE transaction affected comparisons of current year results to prior periods in its wealth segment. That deal was completed at the start of October 2020. In the same month, Morgan Stanley announced that it was buying the asset manager, Eaton Vance. The transactions have consolidated the firm’s presence in the discount brokerage and asset management space. Full-year net revenues were a record $48.2 billion compared with $41.4 billion a year ago. Net income applicable to Morgan Stanley for the current year was $11.0 billion, or $6.46 per diluted share, compared with $9.0 billion, or $5.19 per diluted share, a year ago.
The US firm reported a 20 per cent year-on-year fall in net income applicable to common shareholders, at $702 million in the fourth quarter of 2020. The results were hit by a $159 billion for litigation, severance, losses on business sales and real estate charges.
On the flipside, the results for Q4 2019 were boosted by gains on a sale of an equity investment, offset by certain other costs, such as litigation.
The Chicago-based group reported fourth quarter net income per diluted common share of $1.12, compared with $1.70 in the fourth quarter of 2019 and $1.32 in the third quarter of 2020. Net income was $240.9 million, compared with $371.1 million in the prior-year quarter and $294.5 million in the prior quarter.
Fourth quarter 2020 results included $55.0 million of pre-tax severance-related charges (after-tax $41.2 million) in connection with a reduction in force, and $11.9 million of pre-tax occupancy expense (after-tax $8.9 million) related to an early lease exit arising from a workplace real estate strategy, and $26.8 million of tax expense related to the reversal of tax benefits previously recognized through earnings. Wealth management assets under management stood at $347 trillion, rising 15 per cent from a year ago. Total assets under administration stood at $14.532 trillion, rising 21 per cent.
BlackRock’s total assets under management stood at $8.677 trillion at the end of December 2020, rising from $7.429 trillion a year before. However, the level of inflows decelerated slightly, showing that some of the AuM increase was driven by higher market levels in 2020. There were net flows of $126.9 billion in the fourth quarter of 2020 and $390.8 billion for all of last year, against $128.8 billion and $428.7 billion in Q4, 2019 and 2019, respectively.
The financial services group, which provides services including wealth management, said net income for Q4 2020 came in at $1.456 billion, rising from $1.381 billion a year earlier. In November 2020 PNC announced a definitive agreement to acquire BBVA USA Bancshares, including its US banking subsidiary BBVA USA, from the Spanish financial group BBVA.
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.
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.
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.
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 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.
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.
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.
At the private bank, AuM at the end of 2020 stood at $550 billion.
Investment and wealth management pre-tax income rose by 30 per cent to $311 million, and assets under management stood at $2.2 trillion at the end of December, rising by 15 per cent from the end of 2019. Wealth management client assets rose by 8 per cent to $286 billion.
In the second quarter of 2020 PNC divested its entire 22.4 per cent equity stake in BlackRock. Net proceeds from the sale were $14.2 billion.
Group operating costs, at £13.7 billion, inched up 1 per cent on a year earlier.