Summary Of Wealth Management Firms' Results For First Quarter, 2013

Tom Burroughes

29 April 2013

Here is a summary of results from private banks and other wealth management firms in North America for the first three months of 2013. As a general observation, results were positive - improved profits and assets. Note that not all the institutions are exactly comparable and may report their wealth management business in different ways. The figures may be revised at a later date.

JP Morgan

Private banking revenue rose 13 per cent in the first quarter of 2013 from a year ago, to stand at $1.4 billion. Assets under supervision across the whole banking firm achieved a record level of $2.2 trillion, a rise of $158 billion, or up 8 per cent, from the prior year. Assets under management were a record $1.5 trillion, an increase of $101 billion, or up 7 per cent, due to net inflows to long-term products and the effect of higher market levels, partially offset by net outflows from liquidity products.

Custody, brokerage, administration and deposit balances were $688 billion, up $57 billion, or 9 per cent, due to the effect of higher market levels and custody and brokerage inflows.

Goldman Sachs

The firm reported total net revenues of $10.09 billion for the first quarter ended March 31, up 9 per cent from $9.23 billion in the final quarter of 2012 and up 1 per cent year-on-year. Net earnings fell from $2.89 billion at December 31, 2012, to $2.26 billion in the first quarter of 2013, a decrease of 22 per cent for the quarter. Net earnings were, however, up 7 per cent on the previous year (Q1 2012: $2.10 billion).

Net revenues in investment management were $1.32 billion for Q1 2013, a rise of 12 per cent from the first quarter of 2012, but 13 per cent lower than for the fourth quarter of 2012.

During the quarter, assets under supervision rose $3 billion to $968 billion, reflecting net market appreciation of $12 billion - primarily in equity assets, the firm added.

Total assets under management ended the first quarter of 2013 at $860 billion. This is up from $854 billion in the previous quarter.

Wells Fargo

Net income at the wealth, brokerage and retirement division dropped 4 per cent from $351 million at the end of December 2012, to end the first quarter of 2013 at $337 million. Year-on-year, however, net income in this division is up 14 per cent.

The wealth, brokerage and retirement division of Wells Fargo includes the Abbot Downing division, which caters to ultra high net worth individuals and families.

During the first quarter, total revenue rose by 3 per cent to $3.2 billion, while non-interest expense increased 5 per cent from Q4 2012. The latter result was primarily due to the seasonal impact on personnel expenses, higher deferred compensation expense (offset in trading income) and increased broker commissions.

Northern Trust

The firm reported net income of $164 million for the first quarter of 2013, up 2 per cent year-on-year from $161.2 million, but down 2 per cent from $167.7 million in Q1 2012.

“Trust, investment and other servicing fees, which represent 65 per cent of our revenue, grew 10 per cent compared to last year and assets under custody and under management grew 9 per cent and 13 per cent, respectively, compared to last year,” said Frederick Waddell, chairman and chief executive.

Bank of America

The bank reported that net income at its global wealth and investment management division rose 31 per cent from $550 million at end-March 2012, to $720 million for the first quarter of 2013.

On a consecutive quarter comparison, net income in this segment rose by $144 million between end-December 2012 and end-March 2013.

Assets under management stood at $745.3 billion at the end of March 2013, up from $698.1 billion at the end of December 2012, and further up from $677.6 billion a year ago. The bank said it posted record asset management fees of $1.6 billion, up 9 per cent from the year-ago quarter.

Morgan Stanley

The banking group, which recently agreed to spin off part of its non-domestic wealth management business to Credit Suisse, said its global wealth arm logged pre-tax income from continuing operations of $597 million in the first quarter of 2013, up from $403 million a year ago.

The quarter's pre-tax margin was 17 per cent; net revenues for the quarter were $3.5 billion compared with $3.3 billion a year ago. Income after the non-controlling interest allocation to Citigroup and before taxes was $476 million. (This point refers to Morgan Stanley’s wealth management joint venture with Citigroup. Reports have said the firm may buy 100 per cent of this JV from Citi.)

As reported in late March, Morgan Stanley sold its Europe, Middle East and Africa private wealth management business in the UK, United Arab Emirates and Italy to Credit Suisse. The financial size of the transaction, expected to be completed in the third quarter of this year, was not disclosed by Morgan Stanley. Credit Suisse said the acquired business had a total of $13 billion of assets.

BNY Mellon

Assets under management hit a record $1.4 trillion at March 31, 2013, an increase of 9 per cent compared with the prior year and 3 per cent sequentially. Both increases primarily resulted from net new business and higher market values, it said, as long-term inflows totaled $40 billion and short-term outflows came to $13 billion for Q1 2013.

Long-term inflows benefited from liability-driven investments, as well as equity and fixed income funds. BNY Mellon reported that investment and other income fell from $139 million in Q1 2012 to $72 million in the first quarter of 2013, while the amount was $116 million in the final quarter of 2012.

Citigroup

Private banking revenues rose by 5 per cent year-on-year to $629 million in the first three months of 2013, with growth driven by North America and Asia. The firm provided few other specifics on its private bank operations.

The bank as a whole, across all divisions, reported net income for the first quarter of $3.8 billion, or $1.23 per diluted share, on revenues of $20.5 billion. This compared to net income of $2.9 billion, or $0.95 per diluted share, on revenues of $19.4 billion for the first quarter 2012.