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Summary Of Latest Wealth Management, Bank Results

Tom Burroughes

10 May 2013

Here is a summary of results from private banks and other wealth management firms in North America, Asia, Europe and other locations. 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 as more figures come in.

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 at $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.

UBS

The pre-tax profits at the wealth management arms of UBS both in the Americas and other regions of the world rose in the first three months of 2013 from the previous quarter, while new business inflows in some segments rose to pre-2008 crisis highs. At Wealth Management – the segment not including Wealth Management Americas - pre-tax profit was SFr664 million ($708.9 million), up from SFr398 million, a 67 per cent quarterly increase; adjusted pre-tax profit was SFr690 million, up from SFr415 million.

Wealth Management Americas profit before tax was $251 million compared with a profit before tax of $216 million in the prior quarter. It reported a record adjusted quarterly profit before tax of $262 million in the first quarter of 2013 compared with an adjusted profit before tax of $219 million in the prior quarter. UBS said the profit improvement reflected a 3 per cent decrease in operating expenses, mainly due to lower charges for provisions for litigation, regulatory and similar matters. Net new money continued to be strong and improved to $9.2 billion.

Credit Suisse

Private banking and wealth management arm logged net revenues of SFr3.303 billion ($3.49 billion) in the first quarter of 2013, a 5 per cent year-on-year fall, while pre-tax income stood at SFr881 million. The drop in net revenues was primarily driven by the partial sale of an investment in Aberdeen Asset Management last year, and lower net interest income, partially offset by slightly higher recurring commissions and fees. Transaction- and performance-based revenues were stable compared to a year ago. Among the Wealth Management Clients unit, there was a pre-tax income of SFr511 million, with stable net revenues of SFr2.250 billion compared to the same quarter a year ago, reflecting higher recurring commissions and fees and other revenues, which offset the adverse impact of the ongoing low interest rate environment.

Julius Baer

To be announced on 15 May, 2013.

Deutsche Bank

The asset and wealth management area saw net revenues increase by €88 million (8 per cent) in the first quarter of 2013, compared to the same period in 2012. Discretionary portfolio management and fund management net revenues increased by €37 million (8 per cent), while net revenues from advisory and brokerage services increased by €15 million (8 per cent), driven by higher wealth and private client activity levels. In credit products, revenues decreased by €8 million (8 per cent), due to reduced lending volumes mainly in Asia and the Americas.

Commerzbank

The German bank logged a loss of €24 million ($31.4 million) in the first three months of this year due to previously announced restructuring costs of €493 million, compared with a loss of €225 million in the previous quarter. Revenues rose by 4.7 per cent from the previous quarter; operating expenses fell by 2.9 per cent from the previous three months. Commerzbank attained an operating profit of €469 million (Q4 2012: loss of €40 million). The reasons for the increase over the previous quarter were higher revenues, lower loan loss provisions, as well as lower costs.

Societe Generale

The private banking arm increased its contribution to group net income to €43 million ($56.3 million) in the first three months of this year, up from €36 million in the same quarter of last year. Separately, the French banking giant said it planned a further €900 million of cost savings in the period to 2015. Assets under management at the private banking arm reached a total of €87.9 billion at the end of March, a rise of 2 per cent from the end of December last year. This increase was driven by an inflow of €300 million, and a market effect of €3.7 billion, while there was a negative foreign exchange impact of -€2.2 billion.

BNP Paribas

The investment solutions arm – the division containing much of its wealth management business – logged a rise in assets under management of 1.9 per cent in the first three months of the year compared with a year before, standing at €906 billion ($1.184 billion). The rise was due primarily to a positive performance effect driven by the rise in the financial markets. Net asset inflows were €3.1 billion with “very good inflows” at the wealth management business, especially in Asia and in the domestic markets. Other parts of the investment solutions division, such as insurance in France, Asia and Latin America, also had strong asset inflows, along with personal investors, especiallyin Germany.

HSBC

The private banking segment of HSBC recorded a pre-tax loss of $125 million in the first three months of 2013, a sharp decline compared to its profit of $286 million from a year ago, and its profit of $230 million from the previous quarter. The bank's cost/efficiency ratio surged, standing at 127.5 per cent in the first quarter of 2013 compared to 71.1 per cent in December 2012, and 64.8 per cent in March of the same year. “The first quarter loss for global private banking was caused by a number of one-off items, notably the write-off of goodwill on some non-strategic assets.

Excluding the impact of these one-offs, profit before tax was marginally lower than the last quarter of 2012. Assets under management were broadly stable compared with end of December 2012.”

Barclays

The wealth and investment arm of UK-listed banking group Barclays - which recently announced top-level management changes - said it made an adjusted pre-tax profit of £60 million ($91.6 million) in the first three months of 2013, a 20 per cent rise from a year ago. However, the first-quarter profit fell from £105 million in the previous three months to the end of December 2012.

Lloyds Banking Group

The bank announced it was selling retail and private banking operations in Spain; it reported an underlying profit of £1.479 billion ($2.289 billion) in the first three months of 2013, up sharply from £497 million a year before. The bank, partly owned by the UK taxpayer, logged a statutory profit before tax of £2.040 billion (Q1 2012: £280 million).

Royal Bank of Scotland

The wealth arm of RBS – which includes its flagship Coutts private banking arm - posted a pre-tax, operating profit before impairment losses of £61 million, up from £53 million a year before. Its cost/income ratio in Q1 was 78 per cent, vs 82 per cent a year earlier. AuM, excluding deposits, were £30.8 billion, up 7 per cent from the end of 2012.

DBS

The Singapore-based banking group posted its 11th consecutive quarterly earnings rise in the first quarter of 2013, up 2 per cent from the previous year and 25 per cent from the preceding quarter. Net profit for the three months to 31 March 2013 hit S$950 million ($770 million) as total income grew 18 per cent from Q4 2012 to S$2.32 billion on strong deposit and loan performances. Net interest income went up 3 per cent from the prior quarter to S$1.33 billion, while non-interest earnings soared 49 per cent to a record S$990 million.

OCBC

It posted a 16 per cent drop in after-tax net profit for the three months to 31 March, compared to the previous year, to S$696 million ($564 million). Net interest income declined by 4 per cent from S$591 million from a year ago to S$912 million, as revenue from asset growth was offset by a persistently low interest rate environment and the re-pricing of housing loans in the city state as market competition grew.

On the upside, fee and commission income went up 15 per cent from S$274 million last year to S$316 million, driven by strong wealth management, loan-related and fund management performance. The group's first quarter 2013 revenue from overall wealth management activities remained stable year-on-year at S$520 million, with wealth management contributing 33 per cent to the firm's total revenue for the period, the banking group said in a statement. OCBC's private banking unit also expanded by 27 per cent, with assets under management growing from $35 billion in the previous year to $44 billion as of 31 March.

ANZ

Australian and New Zealand Banking Corporation posted a 7 per cent rise in after tax profit in the first half of 2013, compared to the previous half-year period in the bank's financial calendar, helped by strong returns from its Asian banking businesses and global wealth operations, among others.