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Summary Of Banks', Wealth Managers' Financial Results - Q2, H1 2021
Editorial Staff
7 September 2021
Here is a summary of the results from a range of the major banking groups and some other financial actors around the world. The results focus on the largest institutions which provide wealth management. Not all banks report on a calendar year schedule, and not all the institutions are alike, so the results from standalone institutions such as Julius Baer should be viewed differently from wealth management results embedded within a larger institution. These results may be subsequently revised. Not all the banks reported on the same day, so the exchange rate comparisons with the dollar have been removed. We hope readers find it useful to see these figures collated in one article. To comment, email tom.burroughes@wealthbriefing.com. Julius Baer Deutsche Bank HSBC Standard Chartered
Citigroup
Private banking revenues came in at $993 million in the second quarter of 2021, up 4 per cent and driven by higher fees and lending volumes, partially offset by the impact of lower interest rates. Across the banking group as a whole, Citigroup logged net income in Q2 of $6.2 billion, or $2.85 per diluted share on revenues of $17.5 billion. This compared with net income of $1.1 billion, or $0.38 per diluted share on revenues of $19.8 billion for the same period in 2020.
JP Morgan
Its wealth and asset management arm, including its private bank services, logged second-quarter 2021 net income of $1.153 billion, rising 74 per cent on the same period a year earlier. Net revenues rose by 20 per cent year-on-year to $4.107 billion, while non-interest costs stood at $2.586 billion, against $2.323 billion. Assets under management were $3 trillion, rising 21 per cent, driven by higher markets and net inflows into long-term products. For the JP Morgan group as a whole, net income surged 155 per cent on a year earlier, helped by a sharp reversal of the provision for credit losses made last year as the pandemic struck, offsetting a 7 per cent drop in net revenues.
Goldman Sachs
It reported net revenues of $15.39 billion in the second quarter of 2021, rising 16 per cent from a year before. It logged net earnings of $5.49 billion in Q2, skyrocketing from $373 million a year before. The profit result was assisted by a sharp fall in operating costs - down to $8.64 billion from $10.414 billion. The bank swung from providing for credit losses a year ago as the pandemic erupted to reversing that position. In Q2 this year, there was a negative provision for credit losses of $92 million, against $1.59 billion a year before.
Net revenues in wealth management were $1.38 billion, 25 per cent higher than the second quarter of 2020. Management and other fees were higher, reflecting the impact of higher average assets under supervision, and net revenues in private banking and lending were higher, primarily reflecting higher loan balances, it said.
Morgan Stanley
Wealth management reported net revenues for Q2 of $6.1 billion compared with $4.7 billion from a year ago. Pre-tax income of $1.6 billion in Q2 led to a reported pre-tax margin of 26.8 per cent or 27.8 per cent, excluding the impact of integration-related costs.
BNY Mellon
The firm reported a 13 per cent year-on-year percentage rise in second-quarter wealth management revenues, reaching $299 million. Pre-tax income at the US group’s wealth business surged 48 per cent to $326 million. Across the entire financial organisation, net income applicable to common shareholders rose by 10 per cent year-on-year to $991 million.
Northern Trust
It logged net income of $368.1 million in the second quarter of 2021, down a touch from $375.1 million in the prior quarter but up from $313.3 million a year before. The latest quarterly result included a $17.6 million pre-tax pension settlement charge. The Chicago-based group said that total assets under management (AuM) stood at $1.539 trillion, up 6 per cent from 31 March, and up by 22 per cent from the end of June 2020. Wealth management AuM rose by 22 per cent year-on-year to $371 million; corporate and institutional services also rose by 22 per cent, to $1.168 trillion.
BlackRock
The US asset management titan logged $81 billion of quarterly total net inflows, driven by continued momentum across the platform, reflecting a previously-announced $58 billion low-fee institutional index outflow related to a single client. Total assets under management reached $9.495 trillion, up from $7.317 trillion a year earlier.
UBS
Global wealth management business logged $1.29 billion in pre-tax profits in the second quarter of 2021, dipping from $1.4 billion in the previous quarter but still up sharply (47 per cent) from $880 million a year ago. Recurring net fee income rose by 30 per cent year-on-year, reflecting positive market performance and higher net new fee-generating assets. Transaction-based income rose by 16 per cent on high levels of client activity. Net credit loss costs narrowed to $14 million, from $64 million a year earlier. Cost/income ratio narrowed by 3.3 percentage points to 73.1 per cent, as income rose by 19 per cent and operating costs rose by 14 per cent.
Fee-generating assets reached $1.416 trillion at the end of June this year, rising 7 per cent sequentially; the bank logged $25 billion of net new fee-generating assets, translating to an annualised growth rate of 8 per cent in the quarter. Total invested assets stood at $3.2 trillion.
Credit Suisse
The group, which earlier this year reported big losses stemming from exposure to the collapsed Archegos and Greensill businesses, reported that on an adjusted basis it logged pre-tax income of SFr1.313 billion in the three months to 30 June, falling by 11 per cent year-on-year. Net revenues fell 14 per cent year-on-year to SFr5.226 billion on an adjusted basis. The adjustments excluded significant items. It logged SFr296 million in provision for such losses last year. It moved to a negative figure of -SFr25 million in the quarter. The Common Equity Tier 1 ratio stood at 13.7 per cent at the end of June, up from 12.5 per cent a year ago. Wealth management assets under management reached a record SFr853 billion at the end of June. Wealth management-related businesses reported net revenues of SFr3.6 billion, rising 2 per cent from a year ago. On an adjusted basis, excluding significant items, revenues dropped 5 per cent.
It reported a pre-tax profit on an IFRS basis of SFr707 million for the six months to the end of June, rising by 22 per cent from the same period a year ago. Once taxes were taken out, net profit attributable to shareholders rose by 23 per cent to SFr606 million. On an adjusted basis, pre-tax profit rose by 20 per cent to SFr742 million. Assets under management rose by SFr52 billion to a record high of SFr486 billion, an increase of 12 per cent since the end of 2020, on the back of positive market performance, a weaker Swiss franc (particularly against the US dollar) and continued positive net new money inflows. Net new money doubled to SFr10 billion (annualised net new money growth rate 4.6 per cent), with particularly strong contributions from clients domiciled in Asia and Western Europe, as well as solid growth in the Middle East
Vontobel
Total advised client assets reached a record SFr274.5 billion at the end of June this year, rising 11 per cent from the end of 2020, while net new money grew at an annualised rate of 6 per cent at the upper end of its target range. The Swiss firm logged a pre-tax profit of SFr223.4 million, up from SFr156.1 million from the six-month period a year earlier. Operating income rose to SFr779.6 million in the first half of 2021, up from SFr623 million a year before. The business’s cost/income ratio narrowed to 69.6 per cent from 74.7 per cent in the first half of 2020. The lower ratio was partly due to the “significant increase” in the profit contribution from digital investing, which was achieved at low/marginal costs. Vontobel has set a target of achieving a cost/income ratio of less than 72 per cent by 2022.
Private bank net revenues in the second quarter of 2021 stood at €2.0 billion rising by 3 per cent year-on-year versus the prior year quarter; they would have risen 8 per cent if adjusted for the financial impact of a federal German court ruling. Continued business growth in improved market conditions more than offset pressure on deposit margins from low interest rates. New business volumes of €14 billion in the quarter included €4 billion in net new client loans and €7 billion in net inflows of investment products.
Revenues in the Private Bank Germany dipped 1 per cent but rose 7 per cent when adjusted for the €93 million impact of the court ruling. In April this year, Germany’s Federal Court of Justice ruled that clauses on ‘fictitious consent’ in the event of changes to banks' general terms and conditions (GTCs) were invalid. There was a negative effect on Deutsche's pre-tax profit of €226 million from the ruling requiring active customer consent for pricing changes on current accounts. This included an impact of €96 million in foregone revenues, of which €93 million was in the Private Bank Germany with the balance in the International Private Bank and Corporate Bank. The cost impact was €130 million in litigation expenses, also predominantly in the Private Bank.
The banking group logged a broadly stronger set of figures for the first six months of this year than from a year ago. The wealth and personal banking arm of Hong Kong/UK-listed HSBC, a division which includes private banking, notched up adjusted pre-tax profit of $3.864 billion in the six months to 30 June, more than double from $1.66 billion a year ago. For the entire HSBC group, pre-tax profit stood at $11.95 billion, also doubling from $5.64 billion. In the quarter to 30 June, HSBC said that it logged a reported profit after tax of $3.9 billion, up from $3.2 billion a year earlier.
Barclays
The firm reported a pre-tax profit in the six months to 30 June of £4.979 billion ($5.26 billion), surging from £1.159 billion a year earlier, aided by its ability to swing from provisions for credit impairment changes last year to a net release in 2021 as the pandemic situation improved. The bank also resumed its share buyback programme after the hiatus caused by the pandemic. It reported credit impairment releases of £742 million in H1 2021, against provisions for losses of £3.738 billion a year before.
Lloyds Banking Group
The insurance and wealth arm of Lloyds Banking Group – a segment including Lloyds’ wealth joint venture with Schroders – was squeezed by the harsh economic conditions of 2020, posting an underlying profit for last year of £338 million ($487 million), falling by 68 per cent on a year earlier. Net income fell by 38 per cent year-on-year to £1.299 billion; total costs were marginally lower, at £952 million, narrowing by 8 per cent. The cut in wealth income reflected the transfer of business to the Schroders Personal Wealth JV business in 2019, and lower net interest income caused by very low interest rates,
Consumer, private and business banking pre-tax profit for the six months to 30 June surged by 42 per cent year-on-year to $1.821 billion. For the UK-listed banking group, underlying pre-tax profit was $2.682 billion, rising by 37 per cent. Standard Chartered's Asia region accounted for by far the largest chunk of underlying pre-tax profit, at $2.239 billion (up 41 per cent), followed by Africa and the Middle East at $475 million (up 90 per cent), and Europe and the Americas at $337 million (down 5 per cent). Talking about its wealth management business, the bank said, without giving specific financial figures: “Wealth management delivered a record performance in H1 2021, with income up 23 per cent. There was a particularly strong sales performance in FX , equities and structured notes with our digital investments supporting strong net new sales and assets under management growth, with income excluding bancassurance up 27 per cent.”
NatWest Group
Profit at Coutts and Adam & Co, the private banking arm of NatWest Group, rose sharply in the first half of this year from a year before. The headline profit figure was boosted sharply by provisions for credit losses a year ago swinging into a release this year as the conditions as the pandemic improved. Profit stood at £146 million ($203.6 million) in H1 2021, against £84 million a year earlier. Total income dipped to £368 million from £392, while operating costs weakened to £249 million from £252 million. The bank logged impairment releases of £27 million in the first half of this year, against provisions for losses of $56 million in H1 2021.
The cost/income ratio of the private banking business widened to 67.7 per cent in H1 from 64.3 per cent a year earlier. Total assets under management stood at £29.9 billion at the end of June this year, up from £27 billion at the end of December. Total assets under administration and management were £34.7 billion, up from £32.1 billion.
BNP Paribas
Wealth and asset management revenues rose by 22.4 per cent year-on-year in Q2, to €830 million, and were up in all business lines. They were driven by higher fees and loan revenues in wealth management, the impact of strong net asset inflows and the performance impact in asset management, and the rebound in real estate services revenues from a low base in the second quarter 2020. Operating costs came to €624 million, up by 3.8 per cent compared with the second quarter 2020. Wealth management AuM stood at €410 billion.
Societe Generale
Its asset and wealth management business logged net banking income of €232 million in the second quarter of 2021, steady on a year ago. Within that business division, its private banking area logged net income of €171 million in Q2 2021, dropping by 8.8 per cent. However, the figure actually rose by 8 per cent when taking into account a one-off €29 million impact of an insurance pay-out.
ABN AMRO
It reported a second-quarter profit of €393 million ($460.4 million), bouncing from a loss of €5 million a year ago and loss of €54 million in the first three months of this year. Operating income dipped in Q2 to €1.732 billion, down 13 per cent year-on-year, while costs rose 2 per cent on a year ago to €1.228 billion. Despite that change, a big shift in impairment charges helped the profit result. Last year, impairment charges on financial instruments were €703 million, swinging to a release of €79 million in Q2. Many other major banks worldwide have reported a similar change as the effects of the pandemic appear to be easing from last year. The bank said that its fully-loaded Common Equity Tier 1 ratio was 18.3 per cent in Q2, up from 17.3 per cent a year earlier.
DBS
The bank logged record first-half 2021 net profit of S$3.71 billion, surging by 54 per cent year-on-year, aided by a big drop in provisions for credit losses, and improved business momentum. However, ror the first half of 2021, consumer banking/wealth management income fell by 12 per cent from a year ago to S$2.71 billion. The impact of lower interest rates was partially offset by housing loan and wealth management loan growth as well as higher income from investment products, bancassurance and cards.
OCBC
Group net profit for 1H 21 was up 86 per cent from a year ago reaching S$2.66 billion, largely driven by a 29 per cent rise in non-interest income and substantially lower allowances.
Wealth management income, which comprises the consolidated income from insurance, premier and private banking, asset management and stockbroking, rose 25 per cent to S$2.14 billion from S$1.71 billion a year ago. In 1H 2021, wealth management income accounted for 39 per cent of the group’s total income. Assets under management at its private banking subsidiary, Bank of Singapore, grew 11 per cent from a year ago to $125 billion (S$169 billion) as at 30 June 2021, driven by continued inflow of net new money and positive market valuations.