The latest Q1 private banking figures show that confidence is coming back to the financial markets not just in revenue, but also in profit. Several banks saw positive results in the quarter, particularly in terms of revenue and asset flow. Some banks even broke records this quarter while others have seen the benefits of acquisitions come to fruition. On the other hand, certain private banks have seen diminishing returns in this quarter. This has led to consolidation plans from institutions hoping to cut their losses and remove themselves from turbulent markets. Another crucial aspect is attempting to keep client loyalty despite uninspiring results.
Discussing the quarterly results, Tom Carlisle, analyst at PBI’s sister company WealthInsight, said: "Private banks across the board have had to streamline their businesses through staff redundancies and other cost cutting measures to please shareholders, which is starting to show benefits. This streamlining will also help them in the future, as they look to build ethical and transparent banks that appeal to clients."
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Société Générale Private Bank saw its revenue rise 5%, hitting 207 million, compared to the same period last year. Assets under management (AuM) increased by 1.2 billion to reach 114 billion, with their new private banking model in France contributing 35 billion to this total. The group overall saw revenues increase by 3.3% compared to 2013’s first quarter, reaching 5.8 billion.
UBS beat all predictions in the quarter and saw a 7% rise in profit before tax. In the first quarter of 2013, it recorded pre-tax profit of CHF 988 million, but saw CHF 1.05 billion this year. In addition, the wealth management arm saw pre-tax profit hit CHF 619 million, 31% higher than the CHF 471 million earned in the previous quarter.
Schroders recorded exceedingly good results partly due to the acquisition of Cazenove Capital. Revenues increased by 90% compared to the same period last year, from £26.5 million to £50.3 million. Pre-tax profit sharply increased by 171% to £13.3 million from £4.9 million. AuM also rose slightly by £0.1 billion.
Morgan Stanley Wealth Management saw a record $19 billion in asset flows. Moreover, net revenues were $3.6 billion, compared to $3.5 billion compared to the same period last year, and pre-tax income was $691 million, 15.7% higher year-on-year. The group overall saw $700 million higher net revenues.
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By GlobalDataJulius Baer’s assets under management (AuM) have risen to CHF 264 billion in the first four months, not the first quarter, of 2014, a 4% rise from the end of 2013.This total includes roughly CHF 53 billion AuM from Merrill Lynch’s International Wealth Management (IWM) business located outside the United States, which Julius Baer is in the final stage of transferring.
ABN AMRO recorded EUR 378 million underlying net profit in the first quarter of 2014, EUR 88 million higher than the same period last year. The private banking arm saw a 60% rise in net profit year-on-year, from EUR 35 million to EUR 56 million. This rise was attributed mainly to improved operating results and low impairments. Assets under management rose slightly, hitting EUR 170.6 billion compared to the EUR 168.4 billion in the previous quarter.
Standard Chartered, which saw its first decline in full-year profits in a decade in 2013, recorded a ‘high single-digit percentage’ drop which it believes to be in line with their expectations. As a result of this, the bank has employed a new tactic to combat the recent slowdown, which mainly involves an attempt to offload Standard Chartered’s Geneva-based private banking arm.
Goldman Sachs‘ investment management unit saw its net revenue increase 20% year-on-year to hit $1.57 billion. In addition, total assets under supervision increased by $41 billion to reach $1.08 trillion. Overall, Goldman Sachs reported net revenues of $9.33 billion and $2.03 billion in net earnings.
Credit Suisse recorded a substantial decrease of 34% in income compared to the same period in the previous year, from CHF 1,303 million to CHF 859 million. Its private banking and wealth management arms fared better with a rise of 15% in pre-tax income from CHF 882 million to CHF 1,012 million.
HSBC’s pre-tax profit fell by 20% compared to the same point last year, from $8434 million to $6,785 million. Underlying revenue was also 8% lower at $15,709 million. However, global private banking saw an extra $100 million rise in pre-tax profit.
Barclays saw pre-tax profit fall by 5% to £1,693 million, attributed to a reduction in investment bank income and currency movements. Barclays Wealth and Investment Management recorded a fall in pre-tax profit in the quarter, but a larger 15% compared to the same point last year. Income also dropped from £469 million to £451 million and there was a loss of over £6 billion in client assets. The bank announced the merger of its wealth business into corporate and personal banking.
Deutsche Bank saw major hits as its pre-tax income totalled EUR 17 billion, a 30% dip from the same time last year. Net revenues also fell 11% year-on-year to EUR 8.4 billion, largely due to a decline in the Corporate Banking & Securities division. Deutsche Asset & Wealth management also received a major blow as pre-tax income fell 23% year-on-year, from EUR 219 million to EUR 169 million.
