From the December 2012 issue of Research Magazine • Subscribe!

November 21, 2012

Q3’12 Earnings

Bank of America had net income of $340 million, or $0.00 per share, in the third quarter, compared to $6.2 billion, or $0.56 per share, in the year-ago quarter. Analysts had expected BofA to report a loss of $0.07 per share.

The number of financial advisors stood at 17,533 as of Sept. 30, which is down one from the second quarter but up 439 reps from a year ago. These figures include financial advisors in the mass-affluent Merrill Edge platform and others in BofA’s Consumer & Business Banking segment, which totaled 1,457 in Q3’12; 1,383 in Q2’12; and 1,032 in Q3’11.

The average yearly production (or fees and commissions) of Merrill Lynch advisors—excluding those in Consumer & Business Banking—was $910,000 for Q3, down from $921,000 a year ago and from $915,000 in Q2. On a nine-month basis, current annual production of $910,000 is off of the first nine months of 2011, when production averaged $963,000 per advisor.

Asset flows to advisors in the third quarter were $3.83 billion, down from $3.99 billion in the second quarter of 2012 but up sharply from $1.93 billion in the year-ago quarter. For the first nine months of 2012, new assets totaled $15.64 billion vs. $10.19 billion in the same period of 2011.

Total assets held in Merrill Lynch accounts were $1.86 trillion as of Sept. 30. This is up from $1.69 trillion a year ago and $1.8 trillion in the second quarter. The total Global Wealth unit had assets under management of $2.26 trillion.

Morgan Stanley

Morgan Stanley’s third-quarter results came in ahead of estimates and its advisors—though down 832 from last year—continue to boost assets and sales.

The company, led by James Gorman, said its third-quarter loss from continuing operations was $1 billion, or $0.55 per diluted share, compared with income of $2.2 billion, or $1.14 per diluted share, for the same period a year ago.

The number of financial advisors stood at 16,829—down 1% from 16,934 in the second quarter and 5% from 17,661 a year ago. Average yearly fees and commissions (or production) per rep, though, rose 2% from the second quarter and 9% from a year ago to $790,000 for the third quarter, below Merrill Lynch’s average by $120,000.

When it comes to asset flows, Morgan Stanley reps had $7.5 billion of positive movement (up 83% from the second quarter and down 23% for a year ago) vs. $3.83 billion for Merrill Lynch in Q3. Total client assets for Morgan Stanley were $1.77 trillion—close to the $1.86 trillion in AUM of Merrill’s advisors but below the $2.3 trillion of Bank of America’s wealth unit.

Revenues for the Morgan Stanley’s Global Wealth Management Group were $3.34 billion, a 1% rise from $3.23 billion in the second quarter and a 3% increase from $3.19 in the second quarter of 2012.

The division had pretax income from continuing operations of $239 million compared with $356 million in the third quarter of last year and $393 million in the previous quarter.

In the third quarter, the company had $193 million of non-recurring costs associated with the integration of Smith Barney and the purchase of an additional 14% stake in the joint venture. This increased its stake to 65% from 51%, with the remaining 35% share held by Citigroup.

Wells Fargo 

Wells Fargo reported net income of $4.9 billion, or $0.88 per share, for the third quarter of 2012, up from $4.1 billion, or $0.72 per share, for the third quarter of 2011, and up from $4.6 billion, or $0.82 per share, for the second quarter of 2012.

Third-quarter net income, up 22% over the year-ago period, beat analysts’ estimates. Total revenue of $21.2 billion, though, narrowly missed expectations, according to Reuters. 

The Wealth, Brokerage and Retirement unit reported net income of $338 million, down from $343 million in the previous quarter but up from $290 million a year ago. Revenue was $3.03 billion, up from $2.97 billion in the second quarter and from $2.89 billion a year ago.

In the retail brokerage segment, client assets of $1.2 trillion were up 11% from prior year. Managed account assets increased $59 billion, or 25%, from the prior year “driven by strong net flows and market performance,” the company says. Wealth-management client assets of $199 billion were up 4% percent from prior year. 

Wells Fargo Advisors said its headcount was 18,277, down 109 from 18,386 in the second quarter of 2012. The number of traditional advisors as of Sept. 30 was 10,857 vs. 10,913 in the previous quarter. 

Wells Fargo had 2,827 reps working in banks, along with 3,110 licensed bankers. Other advisors include those in FiNet, its independent-advisor channel. The number of its correspondent clearing firms fell by four to 88 in the third quarter. 

UBS

The Swiss-based firm reported a third-quarter loss of nearly 2.2 billion Swiss francs, or -0.58 Swiss francs per share versus a gain of 3.8 billion Swiss francs, or 0.27 Swiss francs per share a year ago, and a gain of 425 million Swiss francs, or 0.11 Swiss francs per share, in the second quarter. 

This news came on the heels of plans to radically restructure the global bank by shedding it of nearly 10,000 employees by 2015 and ridding it of certain businesses, most notably fixed income. UBS now has about 63,745 staff members and wants to trim down to 54,000.

The wealth-management operations in the Americas, though, had strong results. The unit recorded a pre-tax profit of $230 million, up 35% from a year ago and 9% from the previous quarter.

“The strong progress we have made over the last 12 months allows us to begin implementing this next phase of our strategy” Group CEO Sergio P. Ermotti said in a press release.

UBS’ Wealth Management Americas, led by Bob McCann, also reported that net new money was $4.8 billion, up from $3.8 billion in the previous quarter but down slightly from $5 billion a year ago. Including interest and dividend income (a measure used by some UBS rivals), net new money was $9.8 billion versus $9.0 billion in the second quarter and $9.7 billion a year ago.

The group, which employs a total of 16,182 individuals, now has 7,032 financial advisors. That figure is up 11 from 7,021 in the second quarter, and an improvement of 119 from 6,913 a year ago.

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