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Summary Of Results For Banks, Wealth Managers
Tom Burroughes
5 November 2012
Here is a summary of
the results and calendar dates for the
third quarter 2012 for the world’s major wealth management firms. Not all of
the institutions here are strictly comparable, so the results need to be
interpreted with that point in mind. Some of the figures may, for various
reasons, be subsequently revised. UBS UBS said its global and Americas’ wealth management arms
both logged increased profits in the third quarter of this year. The overall
Zurich-listed banking group reported a Q3 net loss attributable to shareholders
of SFr2.2 billion ($2.35 billion), reversing a Q2 profit of SFr425 million,
caused by impairment losses amid major cutbacks to its investment banking
business. Across all regions, combined inflows to wealth management totalled
more than SFr12 billion in the quarter, UBS said in a statement. Meanwhile, Switzerland’s
biggest bank confirmed expectations – as reported in the media – that it will
significantly cut its investment banking exposures, reducing total headcount by
around 10,000 staff to around 64,000 by 2015. Wealth management pre-tax profit was SFr600 million in the
third quarter of 2012 compared with SFr502 million in the previous quarter.
Total operating income increased by SFr55 million to SFr1.789 billion from
SFr1.734 billion, mainly reflecting a rise in recurring fees on higher invested
assets. Wealth Management Americas’ pre-tax profit in the third quarter of 2012
was $230 million, compared with $211 million in the prior quarter. Operating
income was $1.631 billion, an increase of $44 million from $1.587 billion,
mostly due to higher transaction-based revenue, partly offset by lower net
interest income and lower net trading income. Credit Suisse Switzerland’s second biggest bank said that its private
banking arm reported net revenues of SFr2.591 billion (around $2.78 billion) in
the third quarter of 2012, down 4 per cent on the previous three months and
steady from a year ago, reflecting margin pressures where client activity has
weakened and due to higher costs. Pre-tax income, at SFr689 million in the
quarter, fell 11 per cent from the previous three months but rose sharply – 233
per cent – from a year ago. Julius Baer Group assets under management reached a new record high of
SFr184 billion (around $196 billion), up 8 per cent, since the end of last
year, with total client assets at SFr276 billion, up 7 per cent. The firm said
cost reductions will lead to a “standalone implied cost-income ratio of
approximately 70 per cent and a stand-alone implied pre-tax profit margin on an
adjusted profit basis of approximately 25 basis points for the IWM
business on Julius Baer’s platform in 2015”. Societe Generale The bank is due to issue Q3 results on 8 November. BNP Paribas The bank is due to issue Q3 results on 8 November HSBC The bank is due to issue Q3 results on 5 November Barclays The wealth and investment management business of Barclays
reported an adjusted pre-tax profit of £79 million (around $127 million) in the
third quarter of 2012, up from £65 million a year ago. For the bank as a whole,
total adjusted pre-tax profit stood at £1.727 billion, up from £1.337 billion a
year ago. Total client assets rose to £177.6 billion at the end of September
from £176.1 billion at the end of June this year. The gains principally
reflected gains in the high net worth business. Lloyds Banking Group Lloyds Banking Group announced a sharp improvement in its
underlying profits in the third quarter of this year, while reporting robust
progress within its wealth management business. For the banking group as a
whole, it logged a total underlying profit of £840 million ($1.354 billion) in
the three months to 30 September, double the £419 million profit figure logged
in the same period a year ago. After various provisions and deductions, Lloyds
reported a pre-tax statutory loss of £144 million in the three-month period to
30 September, but one narrower than the £607 million loss made a year before.
The bank has a core Tier 1 capital ratio of 11.5 per cent. The bank, in which
the UK
government holds a major stake, gave few specific numbers on the wealth
management part of the business. Royal Bank of Scotland The wealth management arm logged an operating profit, before
impairment losses, of £73 million ($117.4 million) in the three months to 30
September, up from £49 million a year ago, while over the nine-month period,
the firm's profit rose to £204 million from £187 million. The business, which
includes the firm’s flagship Coutts brand, had a net interest margin of 3.88 per
cent, up from 2.96 per cent a year before; net interest income was £185 million
at end-September, up from £152 million a year ago. The cost/income ratio of
this division was 75 per cent, unchanged from the end of June but down from 82
per cent a year before. Assets under management, excluding deposits, stood at
£29.5 billion, a 4 per cent decline from the end of June. DBS The Singapore-headquartered firm reported net earnings of S$856
million for the third-quarter of 2012, up by 12 per cent from a year ago and up
by 6 per cent from the previous quarter. Total income reached S$2 billion as
fee income rose to a record and net interest income was sustained at recent
highs. For the nine months, net profit rose 13 per cent to S$2.60 billion. The
wealth management segment reported net fee and commission income of S$73
million, a jump of 40 per cent. Deutsche Bank The asset and wealth management arm of Deutsche Bank logged
pre-tax income of €64 million ($82.8 million) in the three months to
end-September, a 65 per cent fall from the same period a year ago, while the
overall German bank’s income rose 20 per cent year-on-year to €1.127 billion.
This business division reported net revenues of €971 million in the third
quarter, a rise of €95 million, or 11 per cent, compared to the same period in
2011, the Frankfurt-listed bank said. Among other details, Deutsche said
revenues from “other products” in the asset and wealth management (AWM)
business rose by €41 million. Of this growth, €29 million was attributable to
asset management; the remaining increase in revenues from “other products” of
€11 million was attributable to private wealth management mainly due to effects
from early redemptions on specific loans in Sal Oppenheim. Bank of America Net income at Bank of America's global wealth and investment
management business rose 50 per cent year-on-year to $542 million for the third
quarter, due to lower expenses and credit costs as well as higher revenue.
Despite the 50 per cent year-on-year gain, net income was down slightly from
the prior quarter (Q2: $547 million). Revenue at the division increased 1 per cent year-over-year
to $4.3 billion, "largely as a result of higher net interest income,"
Bank of America said. Non-interest expense fell 4 per cent from the third
quarter of 2011 due to FDIC expense and lower support and personnel costs. JP Morgan The bank reported record net income for third-quarter 2012
of $5.7 billion, up from $4.3 billion for the same period a year ago. Earnings
per share were $1.40 per share, up from $1.02. In the asset management
division, net income was $443 million, an increase of $58 million, or 15 per
cent, from the prior year. These results reflected higher net revenue, lower
non-interest expense and lower provision for credit losses, JP Morgan said.
Revenue from private banking was $1.4 billion, up 5 per cent from the prior year.
Assets under supervision were $2.0 trillion, an increase of $225 billion, or 12
per cent, from the prior year. Assets under management were $1.4 trillion, an
increase of $127 billion, or 10 per cent, due to the effect of higher market
levels and net inflows to long-term products. Custody, brokerage,
administration and deposit balances were $650 billion, up $98 billion, or 18
per cent. Goldman Sachs The Wall Street firm reported net revenues of $8.35 billion
and net earnings of $1.51 billion for the third quarter, compared with $1.09
billion and $962 million for the previous quarter, respectively. It logged diluted
earnings per common share of $2.85 compared with a diluted loss per common
share of $0.84 for the third quarter of 2011 and diluted earnings per common
share of $1.78 for the second quarter of 2012. The firm had total assets under management of $856 billion
at September 30, up from $836 billion at the end of June and up from $821
billion a year ago. In the latest quarter, there were total net outflows of $1
billion; within that mix, there were $3 billion in outflows from alternative
assets, $1 billion of outflows from equities, but $5 billion of inflows to
fixed income. BNY Mellon Assets under management rose 13 per cent year-over-year and
5 per cent sequentially at BNY Mellon, hitting a record $1.4 trillion at
September 30, 2012. The rise in assets was in a context of both rising market
values and net inflows, with both long- and short-term inflows at $9 billion
for the third quarter. Investment management and performance fees were $779
million in Q3, up 7 per cent year-over-year and down 2 per cent sequentially,
again boosted by rising markets and new business on a yearly basis. Wells Fargo The bank reported a fall in net income at its wealth,
brokerage and retirement division, at $338 million, down $5 million from the
second quarter of this year. Revenue was $3.0 billion, up 2 per cent from the
previous quarter, however; this was helped by $45 million of gains on deferred
compensation plan investments (offset in expense, compared with $31 million in
losses in second quarter 2012). Citigroup The bank reported net income of $468 million in the third
quarter of 2012, an 88 per cent slide from the same three months of a year ago
due in part to one-off factors, the bank said, while total revenues fell to
$13.95 billion, down 33 per cent. Among other causes of the big drop in net
income, Citigroup said the third quarter results included a pre-tax loss of
$4.7 billion ($2.9 billion after-tax) from the previously announced sale of a
14 per cent interest and other-than-temporary impairment of the carrying value
of Citi’s remaining 35 per cent interest in the Morgan Stanley Smith Barney
joint venture. Excluding such factors, third quarter revenues were $19.4
billion, up 3 per cent from the prior period a year before, Citigroup said in a
statement. As far as the private banking business is concerned,
Citigroup said revenues increased by 8 per cent to $590 million from the prior
year period driven primarily by North America
lending and deposits. Northern Trust The Chicago-headquartered bank reported third quarter net income
per common share of $0.73, up from $0.70 in the third quarter of 2011 and
consistent with $0.73 in the second quarter of 2012. Net income was $178.8
million in the current quarter, up 5 per cent from $170.4 million in the prior
year third quarter, and down slightly from $179.6 million in the prior quarter.
Trust, investment and other servicing fees, which represented 62 per cent of
revenue, were $601.9 million in the current quarter, up $46.6 million, or 8 per
cent, from $555.3 million in the prior year quarter. The bank had $4.761
trillion of assets under custody, a rise of 14 per cent from a year ago. Morgan Stanley Morgan Stanley Wealth Management reported $239 million in
pre-tax income from continuing operations for the third quarter of the year,
down from $356 million for the same period in 2011, representing a year-on-year
decline of $117 million. Net revenues for the quarter were $3.3 billion, down
slightly from the $3.2 billion logged a year ago. Meanwhile, the pre-tax margin
for the quarter was 7 per cent, although excluding $193 million of
non-recurring costs associated with the MSWM integration and purchase of an
additional 14 per cent stake in the joint venture, the pre-tax margin stood at
13 per cent. The firm said that asset management fee revenues of $1.8 billion
increased 3 per cent from the third quarter of 2011, "primarily reflecting
an increase in fee-based assets and positive flows." Total global wealth management client assets were $1.8
trillion at the end of the quarter, while assets in fee-based accounts came to
$556 billion - equal to 31 per cent of total client assets. Global fee-based
asset flows for the quarter were $7.5 billion, up from $4.1 billion in Q2.