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Summary Of Wealth Management, Private Banking Results - Updated
Tom Burroughes
20 November 2013
Here is a summary of third-quarter/interim results for
private banks, and the wealth management arms of large banks around the world.
Not all the results are strictly comparable between stand-alone private banks,
for example, and those institutions that are contained within a larger group.
(This is significant when looking at cost/income ratios, for example.) Data may
also be revised or re-stated. Some firms do not disclose their private banking
performance on a quarterly basis. Wells Fargo Net income at the wealth, brokerage and retirement division
of Wells Fargo rose 4 per cent to $450 million in the third quarter of 2013, as
total revenue inched up 1 per cent to $3.3 billion. Year-on-year, net income in
this division shot up 33 per cent from $338 million, while total revenue was up
9 per cent. The 9 per cent hike in revenue was driven by strong growth in
asset-based fees and higher net interest income, partly offset by decreased
brokerage transaction revenue. Citigroup Net income at Citigroup dropped 23 per cent during this
year’s third quarter to $3.2 billion, while private bank revenues – which are
up 1 per cent year-on-year - fell from $645 million to $614 million.
Year-on-year, group net income is up considerably from $468 million, although
it is worth noting that Q3 2012 results included a pre-tax loss of $4.7 billion
($2.9 billion after tax) related to the sale of its stake in its joint venture
brokerage Smith Barney to Morgan Stanley. Total revenues are down 13 per cent
compared to the second quarter of 2013 to $17.9 billion, but are up 30 per cent
year-on-year (Q3 2012: $13.7 billion). Excluding credit/debt valuation
adjustments and the Q3 2012 MSSB loss, Citigroup revenues of $18.2 billion in
this year’s third quarter were 5 per cent below the prior year period. Goldman Sachs Net revenues from investment management totaled $1.22
billion at end-September 2013, up by 2 per cent year-on-year but down by 9 per
cent since this year’s second quarter. The 2 per cent increase in investment
management net revenues reflected higher management and other fees, due mainly
to elevated average assets under supervision. The firm also cited “favorable
changes in the mix of assets under supervision, partially offset by lower
transaction revenues.” For the group as a whole, Goldman Sachs logged net
revenues of $6.72 billion, down from $8.6 billion, or 22 per cent, and $8.5
billion, or 20 per cent, on the previous quarter and a year ago respectively. Northern Trust Wealth management assets under management totaled $211.6
billion at end-September 2013, a year-on-year and quarterly increase of 15 and
4 per cent respectively. Total AuM reached $846.2 billion during this year’s
third quarter, up from $803 billion at June 30, 2013, and up 13 per cent from
$749.7 billion a year ago. In the second quarter, total AuM slipped from $810.2
billion to $803 billion, although it was up 14 per cent year-on-year. Trust,
investment and other servicing fees in wealth management came to $288.2 million
in the current quarter, increasing $20.7 million, or 8 per cent, from $267.5
million in the prior year quarter. For this quarter, such fees were down 2 per
cent from $293.1 million in Q2 2013, which the firm said was primarily due to
higher waived fees on money market mutual funds. JP Morgan Revenue from private banking was $1.5 billion in the third
quarter of 2013, up 9 per cent year-on-year, but unchanged since the second
quarter. Assets under management ended the third quarter at $1.5 trillion, an
increase of $159 billion (12 per cent) from a year earlier, but like private
banking revenue, unchanged since Q2. The year-on-year increase was due to net
inflows to long-term products and the effect of higher market levels. Custody,
brokerage, administration and deposit balances were $706 billion, up 9 per cent
over the year, due to the effect of higher market levels and custody inflows. Bank of America Net income at its Global Wealth and Investment Management
division rose 26 per cent from the third quarter of 2012 to $719 million at
September 30, 2013, which the US-listed bank said reflects solid revenue
performance and low credit costs. Net income is down, however, from the $758
million logged at the end of this year’s second quarter. Revenue at the GWIM
unit rose 8 per cent year-on-year to $4.4 billion as of end-September 2013, but
like net income, is down slightly from $4.5 billion at Q2 2013. Long-term
assets under management flows were $9.7 billion for the quarter, representing a
79 per cent increase from a year ago and reaching $38.9 billion year-to-date.
It described GWIM asset management fees of $1.7 billion as a “post-merger
record,” equivalent to a year-on-year growth rate of 13 per cent. Meanwhile,
GWIM client balances of $2.28 trillion increased $68 billion, or 3.1 per cent,
for the quarter, while Merrill Lynch Wealth Management client balances rose 3
per cent. Morgan Stanley Morgan Stanley Wealth Management reported pre-tax income
from continuing operations of $668 million for this year's third quarter, up
from $247 million and $655 million logged a year ago and in Q2 2013
respectively. Net revenues for the current quarter were $3.5 billion, basically
unchanged from the previous quarter but up from $3.2 billion a year ago. The
pre-tax margin was 19 per cent for Q3 2013. Morgan Stanley said that results
for the current quarter do not include a non-controlling interest allocation to
Citigroup following the completed acquisition of the wealth management joint
venture, whereas Q3 2012 included a non-controlling interest allocation to Citi
of $9 million. Asset management fee revenues of $1.9 billion rose 6 per cent
from last year’s third quarter, which the firm said reflects primarily an
increase in fee-based assets and positive flows, partially offset by lower
referral fees from Citi. BNY Mellon BNY Mellon reported that assets under management amounted to
a record $1.53 trillion at the end of this year’s third quarter, representing a
13 per cent increase compared to the same period last year and a 7 per cent
rise sequentially. Both the year-over-year and sequential increases primarily
resulted from net new business and higher market values. Investment management
and performance fees were $821 million at end-September 2013, up 5 per cent year-on-year
but down 3 per cent on the previous quarter. It said the year-over-year
increase was primarily driven by higher equity market values and net new
business, partially offset by the average impact of the stronger US dollar. DBS Group The Singapore-based banking group that provides services
including wealth management, reported a 1.0 per cent year-on-year rise in group
third-quarter net profit of S$862 million ($694 million), while its chief
executive was tight-lipped on whether his firm may bid for Societe Generale’s Asia private bank. The Asian banking group reported net
interest income of S$1.406 billion in the third quarter, up from S$1.332
billion a year ago; total expenses were S$462 million, a 9 per cent
year-on-year increase. It has a total capital adequacy ratio of 15.9 per cent
and a total cost/income ratio of 44.1 per cent. As far as its consumer
banking/wealth management arm was concerned, DBS logged a pre-tax profit in Q3
of S$179 million, up from S$134 million a year before. ANZ Australia
and New Zealand Bank, one of Australia's
Big Four banks, saw its net profit after tax for 2013 financial year rise by 11
per cent from the previous year to A$6.3 billion ($6 billion) as client
deposits grew and expansion initiatives both inside and outside of Australia
started to bear fruit. The bank issued its results and insisted on how Asia's rising wealth made its focus on the region as more
important than ever before. Its global wealth division, in particular, posted a 36 per
cent rise in profit, with earnings before provisions gaining 20 per cent
year-on-year on a 5 per cent increase in income and 2 per cent drop in
expenses. Global Wealth serves over two million clients and manages some A$59
billion in investment and retirement savings in Australia
and New Zealand.
Wealth solutions held by ANZ customers also rose 11 per cent year-on-year,
helped by increased demand for superannuation products. Retail life insurance
in-force premiums grew 10 per cent and funds under management went up 13 per
cent, driven by the productivity improvements in both ANZ and aligned planner
channels, as well as improved investment market performance. OCBC Oversea-Chinese Banking Corporation, the Asia banking group
that owns the Bank of Singapore subsidiary, reported a net profit after tax of
S$759 million ($610 million) for the third quarter of 2013, while core net
profit, when certain divestments are taken into account, rose 5 per cent from a
year ago. OCBC’s overall income from wealth management activities, comprising income
from insurance, private banking, asset management, stockbroking and sales of
other wealth management products, was S$1.44 billion in the first nine months
of the year, up by 8 per cent from a year ago. As a share of total income, wealth management activities
contributed 29 per cent, as compared to 27 per cent in the previous year.
OCBC’s private banking business continued to expand year-on-year, with assets
under management of S$57 billion as at 30 September, a 15 per cent increase
from S$48 billion a year ago. UBS It logged pre-tax profits in its global wealth management
business, including the Americas,
during the third quarter of this year while it also remained in the black for
the banking group as a whole. As far as the Wealth Management business was
concerned (excluding the Americas business), it achieved year-to-date net new
money of more than SFr43 billion, up around 20 per cent compared to the same
period in 2012, the Zurich-listed bank said in a statement today. Profit before tax at this segment was SFr555 million in the
third quarter of 2013, broadly unchanged compared with SFr557 million in the
prior quarter. Operating income fell by SFr116 million to SFr1.837 billion,
mainly reflecting lower transactional income due to lower client activity
levels. As far as Wealth Management Americas is concerned, profit
before tax in the third quarter of 2013 was $218 million compared with a record
profit before tax of $245 million in the prior quarter. Adjusted for
restructuring charges, profit before tax fell to $232 million from $256 million
in the second quarter. Invested assets in Wealth Management rose by SFr9 billion to
SFr871 billion due to positive market performance of SFr17 billion and net new
money inflows of SFr5 billion, partly offset by negative currency translation
effects of SFr13 billion. Invested assets in Wealth Management Americas,
meanwhile, fell by SFr12 billion to SFr831 billion. In dollar terms, invested
assets increased by SFr27 billion to SFr919 billion, reflecting positive market
performance of SFr25 billion as well as continued net new money inflows. Credit Suisse The private banking and wealth management arm of Credit
Suisse today reported pre-tax income of SFr1.018 billion ($1.14 billion) in the
third quarter of this year, up from SFr936 million a year ago and up from
SFr917 million in the previous three months. The Zurich-listed banking group said net revenues in Q3 were
SFr3.32 billion, a slight gain from SFr3.3 billion a year before. This part of
Credit Suisse reported a cost income ratio of 68.3 per cent, declining from
70.6 per cent a year before. Private banking and wealth management recorded net
new assets of SFr8.1 billion in 3Q13. The wealth management clients arm
contributed net new assets of SFr3.2 billion with continued strong inflows from
emerging markets and from the ultra high net worth individual client segment,
partially offset by continued cross-border outflows in Western
Europe. Deutsche Bank Germany’s largest bank said its Deutsche Asset & Wealth
Management arm enjoyed one of its strongest-ever performances, logging pre-tax
income of €283 million ($390.2 billion) in the third quarter of 2013, a 151 per
cent year-on-year increase attributable to a 12 per cent decline in
non-interest expenses. In the third quarter, the cost/income ratio at this
business division fell sharply to 78 per cent in Q3 compared with 90 per cent
in the same three months of 2012. Net revenues were €1.264 billion, a 29 per
cent year-on-year rise. Invested assets fell by €9 billion to €934 billion,
primarily due to foreign exchange rate movements and outflows of low margin
assets, partially offset by positive market effects. BNP Paribas The Investment Solutions arm of Paris-listed BNP Paribas,
one of the world’s biggest wealth managers, logged a rise in revenues in the
third quarter of €1.543 billion ($2.11 billion) compared with the same three
months of last year. Assets under management at this part of the French firm
stood at €874 billion at the end of September this year, which equates to a 0.5
per cent rise from the end of June but a decline of 1.4 per cent from the end
of December 2012. While there was a positive impact from gains in equity market
indices during the reporting period, the appreciation in the euro’s exchange
rate was an offsetting factor. Within the wealth management part of the Investment
Solutions business, BNP Paribas said there were “strong asset inflows”
particularly in the domestic markets business and in Asia.
The wealth management arm held €279 billion of AuM at end-September. Barclays UK-listed Barclays’ wealth and investment management arm,
which has seen a number of high-profile management changes in recent months,
announced a pre-tax profit for the third quarter of £7 million ($11.2 million),
up by £20 million to overcome a £13 million loss in the previous quarter. The
gain was mainly driven by non-recurrence of the customer remediation provision
at the firm, partly offset by a rise in costs to achieve Transform business
development measures. Those costs rose by £11 million to £44 million. Standard Chartered The UK-listed banking group that earns a large chunk of
earnings in Asia, said it delivered “resilient
performance”, and expected to make low single-digit income gains this year,
while it warned that falls in emerging market currencies such as the Indian
rupee will affect results. The interim statement for the third quarter
contained no hard financial numbers. Lloyds Banking Group The bank, which is part-owned by the UK taxpayer,
reported a statutory pre-tax loss of £440 million ($707 million) in the third
quarter of 2013, widening from its £151 million loss a year before. The bank’s
underlying profit in the nine months to the end of September increased by
£2.551 billion to £4.426 billion, it said. For the first nine months of this
year, the bank also made a pre-tax profit of £1.694 billion. Net interest
income for the quarter was £2.761 billion, a rise of 7 per cent from a year
before; the bank logged impairments of £670 million, narrowing by 47 per cent
from the impairments of a year ago. Royal Bank of Scotland The wealth arm of the bank, which includes Coutts, its
flagship private banking arm, reported a third-quarter pre-impairment profit of
£61 million, down from £71 million ($113.7 million) a year before. Operating
profit was £60 million in the wealth division, down from £63 million a year
ago, RBS said in a statement on its results. At the end of September, it
employed a total of 5,000 staff, down from 5,100 at the end of June and had a
cost/income ratio of 77 per cent, versus 76 per cent in the third quarter of
2012. Assets under management, excluding deposits, were £30.5 billion, a 2 per
cent drop from the end of June. Julius Baer The private bank reported that its assets under management
stood at SFr249 billion ($271.5 billion) at the end of October this year, a 31
per cent rise from the level at the end of 2012, including SFr48 billion from
Merrill Lynch’s International Wealth Management business outside the US
which the Swiss bank is in the process of buying. Following the local closing
of the IWM transaction in Panama and on the back of further client asset
transfers from various locations totalling more than SFr5 billion, IWM assets
under management rose to around SFr54 billion, of which SFr34 billion are
booked on the Julius Baer platforms and paid for. Excluding the impact of the IWM acquisition, the rise in AuM
in the first ten months of 2013 was driven by net new money and a positive
market performance, partly offset by a negative currency impact due to the
strengthening of the Swiss franc against most leading currencies, not including
the euro. Societe Generale The bank said that its private banking arm logged a 97 per
cent year-on-year rise in net income in the first nine months of 2013, standing
at €130 million ($175.9 million), while it rose to €42 million in Q3 from €16
million in the same period a year before. The private banking business “enjoyed robust commercial
activity in Q3 13, particularly for structured products”. Strong performance
boosted the gross margin on this business area to 108 basis points vs 83 basis
points in Q3 2012. The business line’s assets under management amounted to
€83.9 billion at end-September, due to a positive inflow of €800 million in the
third quarter, mainly driven by France
and Asia, a “market” effect of €700 million
and a “currency” impact of €100 million. HSBC The global private banking arm of HSBC reported a pre-tax
loss of $16 million for the third quarter 2013, compared to a pre-tax profit of
$252 million for the same period last year. During a call with analysts, HSBC's
chief executive Stuart Gulliver said that this was a result of the write-off of
goodwill relating to the private banking business in Monaco, which it had considered
selling earlier this year, litigation provision and the repositioning of the
business. Net interest income decreased as higher yielding positions matured
and opportunities for reinvestment were limited by prevailing rates, lending
and deposit spreads narrowed and average deposit balances fell, the bank said. The bank's cost/efficiency ratio was 99.8 per cent in the
third quarter of 2013, compared to 66.3 per cent at the end of the second
quarter in June. ABN AMRO The private banking arm reported a net profit of €125
million ($168 million) in the first nine months of 2013, about doubling from
last year at €64 million. The increase was driven mainly by lower impairments
in the international business, as well as higher management fees from increased
assets under management. Assets under management within private banking rose by
€4 billion in the first nine months of 2013 to €167 billion, mainly as the
result of market performance. Royal Bank of Scotland The wealth arm, which includes Coutts, its flagship private
banking arm, reported a third-quarter pre-impairment profit of £61 million,
down from £71 million ($113.7 million) a year before. Operating profit was £60
million in the wealth division, down from £63 million a year ago. At the end of
September, it employed a total of 5,000 staff, down from 5,100 at the end of
June and had a cost/income ratio of 77 per cent, versus 76 per cent in the
third quarter of 2012. Assets under management, excluding deposits, were £30.5
billion, a 2 per cent drop from the end of June.