A summary of wealth management and private banking financial results for the third quarter of 2019, covering North America, Europe and Asia-Pacific.

Banks have been starting to report their fourth-quarter and full-year results, and here is a quick reminder of what the main groups reported for the third quarter of last year. Note that such results may be revised and not all figures are strictly comparable because of different corporate structures and business models.

 Here’s a brief recap of the major firms’ results, including one non-bank wealth house and the world’s biggest asset manager.

JP Morgan
The group reported that net income at its wealth and asset management arm declined to $668 million in the third quarter of 2019 from $724 million a year earlier. Net revenues rose by 9 per cent over the year, however, standing at $3.568 billion. The US-listed banking giant posted a rise in non-interest expenses of $2.622 billion in its wealth and asset management arm, a rise from $2.585 billion in the third quarter of 2018. Assets under management rose by 8 per cent to stand at $2.2 trillion at the end of the quarter, driven by inflows into long-term and liquidity products, as well as by higher market levels over the reporting period.

Goldman Sachs
The Wall Street firm reported net revenues of $8.32 billion and net earnings of $1.88 billion for the third quarter ended 30 September 2019. Net revenues were $26.59 billion and net earnings were $6.55 billion for the first nine months of 2019. Investment management net revenues included record quarterly management and other fees of $1.46 billion. Assets under supervision increased $102 billion during the quarter reaching a record $1.76 trillion. 

Net revenues in investment management were $1.67 billion for the third quarter of 2019, 2 per cent lower than the third quarter of 2018 and 5 per cent higher than the second quarter of 2019. The fall in net revenues compared with the third quarter of 2018 was due to significantly lower incentive fees. This decrease was partially offset by higher management and other fees (including the impact of the acquisition of United Capital Financial Partners, (United Capital)), reflecting higher average assets under supervision, partially offset by shifts in the mix of client assets and strategies.

Morgan Stanley
The wealth management arm delivered a pre-tax margin of 28.4 per cent; investment management net revenues increased by 17 per cent reflecting strong carried interest and higher fee revenues. AuM exceeded $500 billion. Net interest income decreased by 3 per cent compared with a year ago primarily driven by higher costs due to changes in funding mix, partially offset by growth in bank lending. Wealth management client liabilities were $86 billion at quarter-end compared with $83 billion a year ago. Other revenues increased from a year ago were driven by higher realised gains on available-for-sale securities. 

Citigroup
The bank reported a 2 per cent year-on-year rise in its private banking revenues for the third quarter of 2019, reaching $867 million. The rise was driven by higher lending and deposit volumes, as well as higher investment activity, with both new and existing clients, partially offset by spread compression. The US-listed lender gave few other results for its private banking operation in its statement. Across the Citigroup empire as a whole, it logged a Q3 net income of $4.9 billion, or $2.07 per diluted share, on revenues of $18.6 billion. This compared with net income of $4.6 billion, or $1.73 per diluted share, on revenues of $18.4 billion for the third quarter in 2018.

Group revenues increased by 1 per cent from the prior-year period, including a gain on the sale (approximately $250 million) of an asset management business in Mexico in Global Consumer Banking in the third quarter of last year. When that gain is stripped out, revenues increased by 2 per cent. Group return on equity was 10.4 per cent. The bank had a Common Equity Tier 1 ratio – a standard international yardstick of a lender’s capital buffer – of 11.6 per cent.

Bank of America
The global wealth and investment management arm of Bank of America reported an 8 per cent year-on-year rise in net income for the third quarter of 2019, standing at $1.1 billion, while revenues stood at $4.9 billion, up by 2 per cent. Non-interest costs fell slightly, down by 1 per cent to $3.413 billion. Total client balances rose by 3 per cent to stand at $2.9 trillion at the end of September 2019, powered by higher net flows and rising market levels over the reporting period. There were $5.5 billion in net inflows during the quarter. The wealth management arm logged a wider pre-tax margin for Q3 2019, at 30 per cent, versus 29 per cent a year before.

Wells Fargo
The wealth and investment management arm of the bank, which includes the Abbot Downing business that serves ultra-high net worth clientele, booked a 22 per cent year-on-year rise in third-quarter revenues, standing at $5.141 billion. This segment reported net income in Q3 2019 of $1.28 billion, surging from $732 million a year ago and $602 million in the previous quarter. Wealth management client assets stood at $230 billion by the end of September 2019, slipping by 4 per cent from the prior year, primarily driven by net outflows. Across the bank as a whole, net income fell to $4.6 billion in Q3 from $6.0 billion a year earlier.

Northern Trust
Assets under management rose by 3 per cent year-on-year to $1.202 trillion in the three months to 30 September 2019, while assets under custody/administration rose by 7 per cent over the same period to $11.57 trillion. Wealth management trust, investment and other servicing fees rose by 4 per cent from the same three months a year ago to $415.5 million. Across the whole of the Chicago-based group, Northern Trust said that Q3 net income per diluted common share was $1.69, compared with $1.58 in the third quarter of 2018 and $1.75 in the second quarter of 2019. Net income was $384.6 million, compared with $374.5 million in the prior-year quarter and $389.4 million in the prior quarter. Total consolidated trust, investment and other servicing fees came in at $975.5 million, a rise of 4 per cent from a year earlier. Such fees are the largest component of Northern Trust’s non-interest income. Net interest income, on a fully-taxable equivalent basis, rose by 2 per cent, standing at $425.3 million in Q3 this year.

BNY Mellon
Net income applicable to common shareholders fell by 7 per cent year-on-year in Q3 2019 to $1.002 billion. Investment services total revenues fell slightly; income before taxes rose by 7 per cent, helped by lower litigation costs, which improved the year-on-year comparison. Assets under custody/administration rose by 4 per cent to $35.8 trillion. 

Raymond James 
The US-listed wealth management group reported record net revenues of $2.02 billion and record net income of $265 million, or $1.86 per diluted share, for the fiscal fourth quarter ended 30 September 2019. Excluding a $19 million goodwill impairment associated with its Canadian Capital Markets business, adjusted quarterly net income was $284 million, or $2.00 per diluted share. Net revenue growth of 7 per cent over the prior year’s fiscal fourth quarter was largely attributable to higher Private Client Group assets in fee-based accounts and higher net interest income, primarily at Raymond James Bank. The 5 per cent increase in net revenues over the preceding quarter was mostly driven by sequential growth of asset management and related administrative fees, investment banking revenues and tax credit funds revenues.

In its private client group, Raymond James said it logged record quarterly net revenues of $1.38 billion, up by 6 per cent over the 2018 fiscal fourth quarter and 2 per cent over the preceding quarter. There were assets in fee-based accounts of $409.1 billion, up by 12 per cent over September 2018. 

BlackRock
The world’s largest listed asset management firm said that total AuM, at 30 September 2019, stood at $6.963 trillion, up from $6.444 trillion, up by 8 per cent. Net income fell by 8 per cent from a year ago to $1.119 billion. For the year to date, BlackRock logged net inflows of $299.9 billion.

Royal Bank of Canada
The firm reported a year-on-year rise in net income in wealth management of C$729 million ($553 million) from C$639 million, for the three months ending 31 October 2019. For the full year, net income also rose to C$2.55 billion from C$2.265 billion. The outcome was mainly driven by higher average fee-based client assets reflecting market appreciation and net sales, as well as higher net interest income driven by average volume growth at City National Bank.

Net income also included a gain on the sale of the private debt business of BlueBay (C$134 million after-tax). These factors were partially offset by increased costs in support of business growth, higher variable compensation commensurate with revenue growth and higher PCL.

CIBC
The Canadian bank reported net income for the quarter ended 31 October 2019 of C$1.193 billion, falling from C$1.268 billion. Adjusted diluted earnings per share fell to C$2.84 per share, down from C$3.0. Assets under management stood at C$252 billion at the end of the quarter, up from C$248.39 billion at end-July 2019.

Europe and international

UBS
The global wealth management business felt the chill from “challenging” markets in the third quarter of 2019, with adjusted pre-tax profit falling by 2 per cent year-on-year to $919 million. Across the whole of the UBS business lines (wealth management, investment banking, personal and corporate banking, and asset management), the bank reported that pre-tax profit fell by 21 per cent on the year to $1.345 billion; adjusted pre-tax profit fell by 18 per cent to $1.459 billion. The banking group’s adjusted cost/income ratio stood at 79.1 per cent.

Within the wealth business, recurring net fee income rose for the second quarter in a row on higher invested assets, but was down from 2018. The global wealth and asset management businesses had combined total assets under management of $3.4 trillion, and new money of $49 billion. The bank has restructured its wealth businesses recently, putting all its regional units under one roof.

Credit Suisse
The bank reported better-than-expected results for the third quarter of 2019, posting net income of SFr881 million ($887 million), up by more than double (108 per cent) over the same period last year. Pre-tax income rose by 21 per cent on a year earlier to SFr815 million. Net revenue inched up by 2 per cent to SFr4.999 billion. (The consensus forecast for net income was SFr751 million.) Its wealth management arm performed strongly with revenues rising by 12 per cent across the divisions. This was generally offset by weaker results in the Swiss bank’s investment banking business, which it partly blamed on flat M&A activity. Revenues in the Asian-Pacific arm also declined, with pre-tax income slipping by 15 per cent.

Julius Baer
The Swiss bank reported that its assets under management had reached SFr422 billion ($426 billion) at the end of October 2019, a 10 per cent gain since January, driven by net new money inflows, although a higher Swiss franc/euro exchange rate created a headwind. The Zurich-listed firm said there were “solid inflows” across its wealth operations (driven by strong contributions from clients domiciled in Asia, Europe and the Middle East), partly offset by ongoing outflows from Kairos, its Italian subsidiary. “As a result, the annualised net new money growth rate for the first ten months of 2019 was slightly less than 3 per cent, compared to 4.5 per cent in full year 2018 and 3.2 per cent in the first half of 2019. It is therefore unlikely that the Group will achieve its medium-term target this year,” the bank said.

Vontobel
The firm said advised client assets in all its business lines stood at SFr217.1 billion ($218.62 billion) at the end of September, with net inflows rising over the firm’s 4-6 per cent growth target range. Vontobel said that its results “once again reflected the high profitability of combined wealth management and asset management” although it did not spell out a specific figure. (This publication has asked for details and may update in due course.) The firm said that its profit result was in “line with our expectations in view of the increasingly uncertain market conditions”. Advised client assets in combined wealth management stood at SFR73.6 billion at the end of the third quarter of 2019, rising from SFr67.2 billion). However, growth in new money was below Vontobel’s 4-6 per cent target range and did not accelerate last quarter. As a result, the combined wealth management recorded a net outflow of SFr200 million in the third quarter of 2019.

ABN AMRO
The Netherlands-based firm reported a 24 per cent year-on-year drop in profits for the third quarter of 2019, with the result coming in at €558 million ($614.5 million). The low-interest rate environment is “challenging”, the bank said, and if such conditions persist the lender said it will take longer than planned to boost its margins. The bank said its Q3 cost/income ratio was 59.4 per cent, while its Common Equity Tier 1 ratio – a standard international measure of capital strength – was 18.2 per cent.

Deutsche Bank 
The private banking arm of the Germany-based group logged revenue of €2.054 billion in Q3 of 2019, a 2 per cent drop on a year ago. The wealth management business oversaw about €215 billion ($240.1 billion) of client money as of 30 September. Across the entire bank, Deutsche Bank suffered a €687 million loss in the quarter, falling by 57 per cent year-on-year. Revenues were €5.3 billion, falling by 4 per cent on the same period in 2018. 

Societe Generale
The French bank said its asset and wealth management’s net banking income totalled €218 million in Q3 2019, down by 6.8 per cent versus a year before, falling 3.0 per cent when adjusted for the sale of the Private Banking activities in Belgium. Net banking income in the first nine months of last year was €704 million in 9M 2019, down by 4.1 per cent vs. 9M 2018, and slightly lower (-1.0 per cent) when adjusted for the sale of the Private Banking activities in Belgium. At end-September 2019, private banking’s assets under management were 3.3 per cent higher than in June last year. 

BNP Paribas 
The wealth and asset management arm’s revenues (€803 million) rose by 1.5 per cent compared with the third quarter 2018 driven by real estate services and wealth management. Operating costs totalled €649 million. They were down by 0.8 per cent compared to the third quarter 2018 thanks to the effect of transformation plan measures in particular in Asset Management (50 applications being gradually decommissioned by early 2020 after the successful roll-out of the Aladdin IT outsourcing solution). The jaws effect was thus positive by 2.3 points. At €170 million, wealth and asset management’s pre-tax income, after receiving one-third of the net income of private banking in the domestic markets, in Turkey and in the US, was thus up sharply (+18.3 per cent compared with the third quarter 2018).

HSBC
The group’s global private bank today said that its adjusted pre-tax profit rose to $319 million in the nine months to 30 September 2019 from $280 million a year ago, and its adjusted cost/efficiency ratio narrowed quite sharply to 75.4 per cent from 80.2 per cent. The UK/Hong Kong-listed banking group said that private banking net operating income totalled $11.176 billion in the nine-month period, down from $11.986 billion a year earlier. Total operating costs were $1.052 billion, against $1.072 billion. In the three months to 30 September, the private bank’s adjusted pre-tax profit was $123 million, versus $98 million in the third quarter of 2018. Across the whole of the HSBC bank, the group logged a reported pre-tax profit of $17.2 billion in the nine-month period, a gain of 4 per cent on a year earlier. That figure included a $828 million dilution gain recognised in Saudi Arabia, provisions for redressing clients ($1.2 billion) and $407 million in severance costs. Reported revenues rose by 4 per cent.

Lloyds Banking Group
The UK-listed group said that in the nine months to end-September, it reported a pre-tax profit of £2.9 billion, falling by 40 per cent on the same period of 2018. Net income stood at £13 billion, falling by 3 per cent on a year earlier. In the quarter, the bank suffered a statutory loss of £238 million, against a profit of £1.423 billion. Profit was dented by an additional £1.8 billion payment protection insurance (PPI) charge in the third quarter.

Barclays
Barclays reported that it had chalked up a pre-tax profit of £3.3 billion ($4.24 billion) in the nine months ending on 30 September 2019, a 4 per cent year-on-year gain. Total income rose by 2 per cent to £16.33 billion. Profit attributable to shareholders rose by 10 per cent to £1.78 billion. Operating costs were unchanged at just over £10 billion; litigation and conduct-related costs narrowed to £1.682 billion from £2.147 billion a year earlier. The UK-listed bank’s wealth management operations, while substantial, are not broken out separately in the results figures.

Standard Chartered
Private banking income rose by 14 per cent year-on-year in the third quarter of 2019 to $145 million, benefiting from wealth management, with positive contributions from all products. Across all its business lines, the UK-listed firm reported a surge in attributable profit in the third quarter of this year of $725 million, against $482 million in the previous quarter, although the figure was only slightly higher than the quarter a year ago, at $707 million. Operating income in Q3 2019 was $3.978 billion, up from $3.724 billion a year before. Operating costs slipped to $2.501 billion from $2.511 billion. Standard Chartered’s cost/income ratio narrowed to 64.8 per cent in the latest quarter, narrowing from 68.4 per cent. The bank’s Common Equity Tier 1 ratio, a standard international measure of capital strength, was 13.5 per cent, narrowing from 14.5 per cent a year ago. 

Royal Bank of Scotland
The private banking arm of Royal Bank of Scotland – covering its Coutts and Adam & Co businesses – logged a rise in total assets under management and administration, standing at £29.6 billion ($38.3 billion) at the end of September 2019 from £26.4 billion at the end of 2018. Private banking operating profit rose to £81 million from £75 million in the previous quarter, but fell from £84 million a year earlier. The cost income ratio widened over the 12-month period to 60.1 per cent from 56.4 per cent. The UK-listed private bank said lending rose by £500 million from the previous quarter of this year to £15.2 billion, while deposits rose by £200 million to £1.0 billion, equating to year-on-year growth of 4 per cent. Excluding strategic, litigation and conduct costs, operating costs fell by £1 million from the third quarter of 2018.

DBS
The group made a net profit in the third quarter of 2019 of S$1.63 billion ($1.2 billion) up by 15 per cent compared with S$1.41 billion posted a year ago. Earnings were up by 2 per cent for the quarter. Total income increased by 13 per cent to S$3.82 billion, largely on the back of loan growth, fee income, notably from its wealth management arm, and higher trading gains. Pre-tax profits stood at S$ 2.21 billion, rising by 17 per cent from a year ago, the group reported, in results that broadly beat analysts’ expectations.

Southeast Asia’s largest lender warned that ongoing political and economic uncertainty might result in lower growth down to single digits in 2020. The bank said it had offset S$61 million in Q3 to weather these headwinds. Strong delivery in its wealth management and investment banking grew net fee income by 8 per cent to S$2.31 billion. By business unit, income from the consumer banking and wealth management arms rose by 14 per cent to S$4.79 billion, with growth led by deposit and investment product income. Wealth management fees jumped by 22 per cent to S$357 million from higher investment product sales, the bank reported. Institutional banking income grew by 7 per cent to S$4.58 billion from higher cash management income.

OCBC, Bank of Singapore
Oversea-Chinese Banking Corporation said its private banking and global consumer banking arm logged a 7 per cent year-on-year rise in operating profit, at S$372 million, after taking into account allowances and goodwill amortisation for the third quarter. That division of the lender includes Bank of Singapore. For the entire banking group, operating profit after allowances and amortisation fell by 6 per cent to S$1.318 billion, OCBC said. Wealth management non-interest income rose by 11 per cent year-on-year to $265 million.

United Overseas Bank
The Singapore-based lender logged record net earnings of S$3.34 billion ($2.46 billion) in the nine months to end-September this year, a rise of 8 per cent on the same period a year earlier. Strong wealth management earnings helped boost the result. Total income rose by 10 per cent to a new high of S$7.60 billion, led by broad-based loan growth, higher trading and investment income and steady fee growth. Return on equity increased from 11.6 per cent a year ago to 11.9 per cent. Net fee and commission income increased by 4 per cent to S$1.56 billion, driven by wealth management flows, higher loan-related and credit cards fees, moderated by lower fund management fees. Other non-interest income grew by 41 per cent to S$1.11 billion with trading and investment income rising by 52 per cent to S$892 million from higher customer flows and gains from investment securities.