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Summary Of Quarterly Results In Global Wealth Management
Tom Burroughes
14 May 2012
Editor’s
note: Here is a summary of first-quarter results for private banks and
wealth management firms. While all possible care has been taken to
present results accurately, not all of the figures here may be strictly
comparable. UBS Switzerland’s largest bank said wealth management pre-tax profit was
SFr803 million in the first quarter of 2012 compared with
SFr471 million in the previous quarter, and included a reduction in
personnel expenses of SFr237 million related to changes to its Swiss
pension plan. Adjusted for this item and restructuring charges, pre-tax
profit increased by SFr110 million to SFr578 million. In the Americas business of UBS, meanwhile, the division achieved its
highest reported quarterly pre-tax profit of $209 million in the first
quarter of 2012 compared with $156 million in the prior quarter. “The
quarter was marked by higher transactional activity and included higher
realised gains on sales of financial investments in the
available-for-sale,” it said. Credit Suisse Credit Suisse said net revenues at its private banking arm stood at
SFr2.651 billion in the first quarter of this year, a
rise of 3 per cent on the previous quarter. Private banking comprises
the global wealth management clients business and the Swiss corporate
and institutional clients business. The wealth management clients
business reported net revenues of SFr2.185 billion, 10 per cent below
the first quarter of 2011 and 3 per cent above the fourth quarter of
last year, both mainly due to transaction-based revenues. Income before
taxes was SFr406 million in the first quarter of this year compared to
SFr624 million in the first quarter of 2011 and to SFr285 million in the
fourth quarter of 2011. Lloyds Banking Group Lloyds, the UK banking group partially owned by the government,
posted an impairment charge for its wealth segment of £705 million
for the first quarter of 2012, down from £1.5 billion
for the same period last year. The wealth business of the banking group falls within the “wealth and
international” arm of Lloyds, which covers a number of business
interests besides private banking, such as operations in Ireland and
Australia. The impairment charge was also significantly lower than the
£1.32 billion the bank reported for its wealth and international segment
for the final three months of 2011. Barclays The wealth and investment management arm of UK-listed Barclays
reported a pre-tax profit of £60 million in the
first three months of 2012 from £46 million a year before, while total
profit – on an adjusted basis - across the entire bank rose to £2.445
billion, a 22 per cent year-on-year rise. This is the first time that
Barclays has issued results for its wealth business since it rebranded
from the old Barclays Wealth name earlier this year. The wealth and
investment business reported a cost/income ratio of 85 per cent in the
first quarter, a slight fall from 86 per cent a year earlier. HSBC HSBC today reported that first quarter pre-tax profit for its global
private banking segment in the first quarter of 2012 fell by $22 million
year-on-year to $286 million, hit by weaker revenues and higher loan
impairment charges, partly offset by lower operating costs. Fee income
declined, driven in part by lower average assets under management, the
UK/Hong Kong-listed banking giant said in quarterly figures today. In
its North America segment, the private bank reported a profit of $23
million, down from $32 million a year ago but up sharply from $7 million
in the previous quarter. The private bank reported net outflows $500 million, “primarily the
result of a small number of large withdrawals in Switzerland, partly
offset by net new money inflows in Asia.” Standard Chartered Wealth management income for the first three months of 2012 held in
line with the strong first quarter of a year ago and “up on the run rate
seen in the second half of 2011”, UK-listed Standard Chartered said,
while giving few other details. The bank, which earns the bulk of its
revenues outside the UK, said in an interim statement that across the
whole business, it had a “strong start to the year, with high single
digit income growth over the comparative period of 2011”. Royal Bank of Scotland The wealth division of Royal Bank of Scotland, which includes Coutts,
the private bank, reported an operating profit before impairment losses
of £55 million in the first three months of this
year, down from £86 million in the previous three months and £75 million
a year ago. The parent firm, which is partly owned by the UK taxpayer,
suffered a first-quarter loss. Part of the dent to the first-quarter
profit was caused by an £8.75 million fine imposed on Coutts by the
Financial Services Authority in connection with failings connected to
anti-money laundering procedures. Société Générale The private banking arm of the French bank reported net income in the
first quarter of 2012 of €36 million , down from €43
million in the first three months of last year, while total assets under
management rose slightly. At €200 million, the business line’s revenues
fell by 10.7 per cent from a
year ago. Operating expenses at the private bank were €148 million, down
6.9 per cent year-on-year, benefitting from the operating adjustments
implemented in the second half of 2011. Total assets under management at
the private bank rose slightly at the end of the quarter to €85.4
billion, compared with €84.7 billion at the end of December last year. BNP Paribas Pre-tax income at the investment solutions arm, which includes wealth
management, was €483 million in the first three months
of this year, a 9.3 per cent year-on-year decline. Total revenues were
€1.521 billion, unchanged from the same quarter in 2011, it said. Gross
operating income was €478 million, a 0.2 per cent fall. “This quarter, the net asset inflows of Investment Solutions totalled
€12.6 billion euros. All the business units made a positive
contribution: asset management thanks to strong asset
inflows into money market funds from institutional investors; Private
Banking , especially in the domestic markets and in Asia;
Insurance thanks to good asset inflows in France,
Luxembourg and Asia; Personal Investors and Real Estate
Services ,” it said. Crédit Agricole Assets under management at the private banking arm rose 2.3 per cent
in the first quarter of 2012 from the previous three months, driven by a
3.4 per cent rise in assets under management by LCL Banque Privée, as
inflows of interest-bearing deposits offset outflows of securities.
Internationally, aided by a favourable currency impact, assets under
management moved up 2.2 per cent in the first quarter of 2012 even
though business was adversely affected by instability in the eurozone
and customer mistrust of European banks. Deutsche Net revenues at the private clients and asset management arm at
Germany’s biggest bank fell to €3.4 billion in
the first three months of this year compared with €4.1 billion a year
before. The figures were “positively impacted” by €263 million related
to Deutsche’s stake in Hua Xia Bank for which equity method accounting
was applied for the first time. The remaining decrease was mainly
attributable to lower operating revenues in Postbank driven by the
impact of de-risking activities and also reflecting a low interest rate
environment, as well as lower releases of loan loss allowances recorded
prior to consolidation. Commerzbank The private customers segment at Germany’s Commerzbank posted an
operating profit of €112 million for the first quarter
of the year, in line with last year’s level of €116 million. JP Morgan The bank’s net income in the first quarter of 2012 was $5.4 billion,
down from $5.6 billion in the same three months of 2011, while private
banking revenue slipped slightly. JP Morgan said revenue from private
banking was $1.3 billion, down 3 per cent from the prior year but gave
few other details. Bank of America Net income at Bank of America’s global wealth and investment
management business rose by around $5 million year-over-year to $547
million for the first quarter 2012, while net income across the bank
tumbled by over a third. At the wealth business, net income was also up
significantly on a consecutive basis from $259 million in the final
quarter of last year. Total revenue at the GWIM unit decreased 3 per
cent compared to the prior-year quarter, falling from $4.5 billion to
$4.4 billion, as lower transactional activity took its toll. Northern Trust The bank reported a 3 per cent rise in assets under management at its
Personal Financial Services division, the firm’s wealth management
unit, in the three months to 31 March. The Chicago-based firm managed
$179.1 billion for private individuals at the end of the first quarter,
up from $173.7 billion at the end of 2011. Since 31 March 2011, when the
firm had $168.4 billion in PFS client assets, the firm has boosted
wealth management AuM by 6 per cent. BNY Mellon The Bank of New York Mellon reported 2012 first quarter income
applicable to common shareholders of $619 million, down from $625
million a year earlier. Total fee and other revenue held steady on a
year-over-year basis at BNY Mellon at $2.8 billion. Investment
management and performance fees comprised $745 million of these
revenues, down from $764 million a year earlier, driven by higher money
market fee waivers, partially offset by net new business. Assets under
management, excluding securities lending assets, were $1.3 trillion at
31 March 2012, up 6 per cent from the prior year and 4 per cent
sequentially. Goldman Sachs Earnings at the investment management division were $1.11 billion for
the first quarter, down 6 per cent from a year earlier. Net revenues at
the division fell 8 per cent on a year-over-year basis to $1.18
billion. Lower management and other fees, as well as lower transaction
revenues, dragged revenues down relative to the first quarter 2011. Over
the quarter, the firm saw assets under management net outflows of $26
billion, predominantly in money market assets
but also in equity and alternative investments. On the other hand, net
market appreciation of $22 billion saw AuM fall by only $4 billion, to
$824 billion. DBS Southeast Asia’s biggest lender posted a 16 per cent rise in net
profit to a record S$933 million in the three months to
March 2012 from a year ago, bolstered by customer lending. Net interest
margins increased four basis points to 1.77 per cent from higher loan
yields. Loans rose 3 per cent
to S$198 billion, with Singapore-dollar loans leading the increase. Macquarie Group The Australia-based banking group saw its net profit after tax drop
24 per cent in the full year to 31 March 2012 from the year-earlier
period due to low client activity and global market uncertainty. Net
earnings for the period was recorded at A$730 million, although this was
partially offset by a 39 per cent rise in earnings to A$425 million in
the second half compared to the preceding six months.