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Summary Of Banks', Wealth Managers' Q2, H1 2022 Results
12 August 2022
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 firstname.lastname@example.org Citigroup JP Morgan Goldman Sachs Morgan Stanley BlackRock UBS Credit Suisse Julius Baer Deutsche Bank HSBC Barclays Coutts
Its second-quarter results show that revenue rose by a better-than-expected 11 per cent from the prior-year period, driven by increased rates, client activity in markets and continued momentum in the US cards businesses. This was partially offset by a slowdown in investment banking activity as well as investment fee headwinds in global wealth management. Revenue reached $19.6 billion in the second quarter, more than $1 billion over estimates, with growth in both net interest income as well as non-interest revenue.
Higher net interest income was primarily driven by the benefits of higher rates as well as strong volumes across institutional clients' group, personal banking and wealth management. Global wealth management revenues of $1.9 billion were nevertheless flat, as investment fee headwinds, particularly in Asia, were offset by growth in average deposits and loans.
Within the asset and wealth management arm – which includes private banking – JP Morgan said net income was $1.0 billion, down 13 per cent on a year ago. Net revenue was $4.3 billion, up 5 per cent, predominantly driven by growth in deposits and loans on higher balances and margins, partially offset by investment valuation losses compared with gains in the prior year and lower performance fees. Noninterest costs rose 13 per cent to $2.9 billion, driven by higher structural costs and investments in the business, including compensation, and higher volume- and revenue-related expense, including distribution fees.
It announced a 28 per cent slide in net income for the three months to end of June, standing at $8.649 billion. The lender built $428 million of net credit reserves in the quarter, versus a net release of $3.0 billion in the same period a year ago. The change hit the headline figure.
The private banking, consumer banking and wealth arm logged a 33 per cent year-on-year rise in pre-tax earnings, reaching $238 million, while net earnings rose 37 per cent to $201 million. Net revenues at this business division rose 21 per cent to $2.104 billion, while the provision for credit losses swung into a net release of $254 million in the latest quarter, a change of 323 per cent over the past 12 months.
Assets under supervision across the whole of Goldman Sachs fell by $76 billion in the quarter, with consumer and wealth management AuS falling by $13 billion, and asset management AuS falling by $63 billion. In total, consumer and wealth management AuS stood at $738 billion at end-June; asset management AuS was $1.656 trillion
Pre-tax income fell to $3.319 billion in the second quarter of 2022 from $4.566 billion a year ago, as net revenues fell and non-compensation costs rose. Net revenues fell to $13.132 billion from $14.759 billion; non-compensation expenses rose to $4.162 billion from $3.697 billion, it said in a statement.
Within the wealth management business, this division delivered a pre-tax margin of 26.5 per cent or 28.2 per cent when integration costs are taken out. Net revenues were $5.7 billion, negatively impacted by mark-to-market losses on investments associated with certain employee deferred compensation plans. The business added net new assets of $53 billion in the quarter and $195 billion in the first half of 2022. The quarter also saw continued growth in bank lending and $29 billion of fee-based flows.
Wealth management pre-tax income at BNY Mellon stood at $296 million in the three months to June 30, down a touch from $299 million a year earlier. Market and wealth services, including the Pershing business that provides custody and other offerings for wealth managers and banks, stood at $1.314 billion in Q2 2022, rising from $1.192 billion a year earlier. Investment services fees at Pershing rose to $479 million from $439 million over the year, a rise of 9 per cent
Net income at Chicago-based Northern Trust stood at $406 million in the fourth quarter of 2021, almost doubling from $240 million a year earlier, while revenues rose to $1.68 billion, up 9 per cent. Wealth management assets under management stood at $416 billion, rising 20 per cent at the end of 2021 from $347.8 billion a year earlier. As far as wealth assets under custody/administration were concerned, the figure rose 21 per cent to $1.065 trillion at end-December 2021. Total wealth management trust, investment and other servicing fees rose to $485.9 billion, up 13 per cent. Within Northern Trust’s Global Family Office segment, such fees dipped 1 per cent year-on-year in the quarter to $73 billion. Fees in the family office segment fell sequentially, primarily due to higher money market mutual fund fee waivers.
The world’s largest fund management house said its total assets under management could not withstand the asset-eroding impact of falling markets. In its results for the three months to end-June, it reported total assets under management of $8.487 trillion, a fall of 11 per cent on a year before. Total net flows to the business held up, however, and totaled $89.573 billion in the quarter.
On an adjusted basis, net income fell 30 per cent year-on-year to $1.122 billion; diluted earnings per share were $7.36 per share, down 30 per cent. Operating income fell to $1.727 billion, down by 14 per cent. Revenues fell by 6 per cent.
It said the global wealth management arm logged a pre-tax profit in the second quarter of 2022 of $1.157 billion, down from $1.294 billion a year ago and down from $1.31 billion in the first quarter of this year. Total revenues in the wealth business declined 2 per cent to $4.667 billion; expenses stood at $3.523 billion, widening from $3.479 billion.
Net interest income increased by 24 per cent, mainly reflecting higher deposit revenues, which were driven by both higher deposit margins, as a result of rising interest rates, and increased deposit volumes. Recurring net fee income fell by 6 per cent, primarily driven by negative market performance and foreign currency effects, partly offset by net new fee-generating assets over the past 12 months.
The bank reported a net loss, attributable to shareholders, of SFr1.593 billion, contrasting with net income of SFr253 million a year earlier. At the investment banking arm in particular, Credit Suisse said that on an adjusted basis, this division posted a “significant” pre-tax loss of $860 million, against pre-tax income of $663 million in 2Q21, “reflecting extremely challenging market conditions, particularly in capital markets.” (The IB figures were given in US dollars rather than Swiss francs.)
On an adjusted basis, its wealth management pre-tax income fell to SFr114 million, falling from SFr432 million, a slide of 74 per cent on a year ago due to reduced client activity, lower volumes impacting revenues and higher costs.
Adjusted pre-tax income was hit by certain asset impairments and non-operational charges, including SFr17 million relating to certain third-party assets, mark-to-market losses in Asia-Pacific financing of SFr21 million, SFr24 million relating to the supply chain finance fund fee waiver programme, and other costs. WM net revenues fell 34 per cent to SFr1.3 billion.
The WM business sustained net asset outflows of SFr1.4 billion in Q2, mainly driven by outflows from EMEA and Switzerland, including client deleveraging, partially offset by inflows from Asia-Pacific and the Americas. Total assets under management stood at SFr662 billion, down from SFr769 billion, mainly caused by falling markets.
Pre-tax profit, on an IFRS accounting basis, fell 27 per cent to SFr513 million in the first half of 2022, while IFRS net profit attributable to shareholders fell 26 per cent to SFr451 million. Results were affected by a large rise in provisions and losses following the settlement of a legacy litigation case. On 30 June this year the Swiss bank resolved a claim by the liquidator of a Lithuanian corporation filed in Geneva in 2019, related to matters dating back more than 10 years. (The claim was for €335 million plus 5 per cent interest per annum since December 2011. About half of the settlement of €105 million was covered by provisions in place prior to 2022. The balance of SFr55 million was charged against the 2022 half-year financial results.)
It logged a 46 per cent year-on-year pre-tax profit of SFr467 million. Profit after taxes rose by 48 per cent to SFr384 million. Operating income rose by 21 per cent to SFr1.536 billion. Wealth and asset management business accounted for 80 per cent of the record income generated in 2021. Operating income in the business with asset management clients rose by 15 per cent to SFr594 million. The strongest income driver was the global business with wealth management clients, where operating income grew by 15 per cent to SFr634 million compared with 2020’s level.
The private banking arm logged a pre-tax profit of €463 million, versus a €15 million loss a year ago. Private bank net revenues were €2.2 billion, rising 7 per cent on a year earlier, or 4 per cent if adjusted for effects such as a cut in foregone revenues from a German court ruling and lower revenues linked to workout activities from its acquired Sal Oppenheim business. Within the German private bank, the group said revenues rose 11 per cent, although the gain was only 3 per cent if adjusted for the reduced impact of the BGH ruling. (This relates to the German Federal Court of Justice (BGH) April 2021 ruling on customer consent for pricing changes on current accounts and the non-recurrence of a negative prior-year impact from the sale of Postbank Systems AG.)
At the international private bank, revenues rose 2 per cent, or 6 per cent if adjusted for the effect on revenues of Sal Oppenheim workout activities. The German lender said its private bank logged net new business volumes of €11 billion in the quarter. This included net inflows of €7 billion, including inflows into investment products of €5 billion and new deposits of €2 billion, and net new client loans of €4 billion.
The wealth and personal banking arm – which includes its private banking arm – logged an adjusted pre-tax profit of $2.946 billion in the half-year to June 2022, a decline from $3.751 billion a year earlier. Operating costs at this business division stood at $7.411 billion, up from $7.277 billion a year before; net operating income was $10.349 billion, from $11.018 billion.
It reported profit attributable to shareholders of £2.5 billion for the first six months of 2022, down from £3.8 billion in the same period a year ago. The figure reflected a £600 million net of tax impact for over-issuance of securities in the US. Stripping out the over-issuance of securities, the UK-listed bank said that group income was £12.4 billion, rising 10 per cent year-on-year, driven by strong client activity in markets, recovery in both consumer, cards and payments (CC&P), and Barclays UK more than offsetting the impact of a weak fee pool in investment banking.
Total operating costs increased to £9.127 billion, from £7.3 billion in the same half-year period of 2021. Litigation and conduct charges rose sharply to £1.857 billion (H121: £176 million), it said. These significantly added to the cost figures.
Barclays doesn’t break out financial results for its wealth and investment business.
The private banking arm of UK-listed NatWest Group said its operating profit in the three months to end-June 2021 stood at £105 million, up from £82 million a year earlier. For the six-month period to the end of June, meanwhile, the profit figure was £187 million, rising from £146 million. The private bank’s cost/income ratio was 61.8 per cent at the end of the half-year period to 30 June, narrowing from 67.6 per cent a year before. NatWest said that its private bank pulled in £1.4 billion of net new money in H1 2022, down a touch from £1.6 billion a year before.
Profit, attributable to shareholders, was $1.873 billion for the six months to the end of June, from $1.718 billion a year before. Underlying pre-tax profit rose 5 per cent to $2.817 billion. Operating income rose 8 per cent year-on-year to $8.225 billion. Operating costs fell 2 per cent on a year ago to $5.328 billion. The group’s cost/income ratio was 64.8 per cent from 68.4 per cent a year earlier.
Announced pre-tax profits of £3.66 billion for the first six months of June, 6 per cent lower than the same period in 2021 but beat expectations. Statutory profit after tax reached £2.8 billion, compared with £3.9 billion the same time last year. This was due to the higher net income being more than offset by the non-repeat of the significant impairment release and the deferred tax credit in the first half of 2021. Underlying profit before impairment was up 34 per cent to £4.1 billion in the first half of 2022, driven by strong net income growth
Wealth management and consumer banking income fell by 8 per cent in 2021 from a year before to S$5.32 billion, with the impact of lower interest rates somewhat moderated by loan and deposit growth. For DBS overall, it achieved a record net profit of S$6.80 billion in 2021, rising 44 per cent from the previous year and restoring a trend of consecutively higher earnings disrupted by the pandemic in 2020.
Return on equity rose to 12.5 per cent from 9.1 per cent a year ago. “Strong business momentum” mitigated the full-period impact of interest rate cuts in March 2020 and “exceptional investment gains” the previous year, it said in a statement. Loan growth of 9 per cent was the highest in seven years, while fee income and Treasury Markets income rose to record levels. Fourth-quarter 2021 net profit was S$1.39 billion, a 37 per cent rise from a year ago.
Wealth management fees increased by 19 per cent to a record S$1.79 billion from higher sales of investment products and bancassurance. Assets under management in the wealth arm stood at S$291 billion at the end of 2021, up from S$264 billion a year before.
OCBC, the parent of Bank of Singapore reported that its group net profit for the first six months of 2022 rose 7 per cent from a year ago to S$2.84 billion, buoyed by rising interest rates, which helped margins. In the three months to 30 June, net profit was S$1.48 billion, surging 28 per cent year-on-year, and up 9 per cent from Q1 2022.
OCBC said its wealth management income, comprising income from insurance, private banking, premier private client, premier banking, asset management and stockbroking, grew 8 per cent in Q2 2022 from a year before to S$1.03 billion; this division made up 36 per cent of the group’s income in the second quarter. At June 30, 2022, assets under management in the wealth arm stood at S$250 billion, falling from S$254 billion a year ago as net new money inflows were more than offset by a drop in market valuations.
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 email@example.com