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May 30, 2013 at 09:37 AM
Earnings for the financial services sector improved an average of 53% in the quarter ended March 31, according to data compiled by Reuters. This was down from an 85% average EPS jump in the quarter ended Dec. 31, 2012.
Sales for financial services firms moved up 20% on average in Q1 2013, after improvement of more than 50% in Q4 2012. The sector’s 12-month sales growth rate is 12% on average, as of March 31.
The financial-services sector’s earnings-per-share growth rate over the past five years is about 27%, Reuters says. Sales momentum has averaged around 14% for the same period.
Morgan Stanley and Bank of America had strong improvements in their quarterly results. Stifel Nicolaus, meanwhile, saw its results negatively impacted by several large acquisitions.
Here are 12 companies, ranked in terms of how they out- or underperformed their broker-dealer rivals.
(Check out last quarter’s winners and losers in 12 Best & Worst Broker-Dealers: Q4 Earnings at AdvisorOne.)
WORST
12th Place
STIFEL FINANCIAL (SF)
St. Louis-based Stifel Nicolaus had net income of $14.62 million, or $0.21 per share, in Q1’13 vs. $34.8 million, or $0.55 per share, a year earlier. This represents a drop of 58% in earnings and 62% in EPS.
Stifel’s net revenues, though, grew close to 6% year over year to $441.8 million, compared with $400.3 million for the first quarter of 2012. Its total global wealth management operations accounted for $267 million of sales, while the private-client segment produced $158.3 million of revenue.
Two items significantly impacted GAAP results for the latest quarter: a noncash after-tax charge of $19.2 million, or $0.28 per share, related to stock awards issued in connection with the acquisition of KBW, an investment bank and broker-dealer, and after-tax expenses of $6.1 million, or $0.09 per diluted share, associated with buying both KBW and the investment bank Miller Buckfire, according to the company.
Stifel has about 2,063 financial advisors, up 50 from last year and 22 from the prior quarter.
11th Place
UBS (UBS)
UBS (UBS) had a first-quarter net profit of 988 million Swiss francs ($1.06 billion), or 0.26 Swiss francs ($0.28) per share, down slightly from 1.035 billion Swiss francs ($1.11 billion) a year ago, or 0.27 Swiss francs ($0.29) per share—beating analysts’ estimates.
This represents a drop in earnings of 4.5% and an EPS decline of 3.7%, which is a huge improvement for the firm. In Q4’12, the global bank lost 2.2 billion Swiss francs (or about $2.4 billion), due to LIBOR troubles and related issues.
“While it is too early to declare victory, we have shown our business model works in practice,” said UBS Group CEO Sergio P. Ermotti in a press release.
The company says the Wealth Management Americas unit “achieved another record profit and strong net new money inflows.” The Americas operations reported adjusted quarterly profits before tax of $262 million in the first quarter of 2013, compared with $219 million in the prior quarter.
The number of UBS financial advisors in the Americas is 7,065, up 6 from the prior quarter and 50 from a year ago. Client assets under management total $936 billion versus $885 as of Dec. 31 and $851 billion as of March 31, 2012.
10th Place
TD AMERITRADE (AMTD)
TD Ameritrade (AMTD) reported a 5% rise in profits for the first quarter: $144 million vs. $137 million a year ago, citing 11% client asset growth for the second fiscal quarter. Earnings per share were $0.26 compared with $0.25 a year ago, an improvement of 4%.
The company reported net second-quarter revenues of $679 million, 55% of which were asset-based, vs. $673 million a year ago. Average investor client trades per day totaled roughly 378,000, versus 387,571 a year ago.
Net new client assets were $12.9 billion versus $10.8 billion a year ago.
TD Ameritrade said it had fee-based revenue of $62 million, up 38% year over year, as well as client assets of about $517 billion.
“While retail investor sentiment has improved, a large number of investors remain cautious in this environment, and yet we continue to execute well against our strategy and on the items we can control,” said Fred Tomczyk, president and CEO, in a statement.
9th Place
GOLDMAN SACHS (GS)
Goldman Sachs said its first-quarter earnings were up 7% as net income hit $2.26 billion in the first quarter, up from last year’s $2.11 billion.
Diluted earnings per common share was $4.29 compared with $3.92 for the first quarter of 2012—a 9% jump—while revenue rose 1% to $10.09 billion.
“We are pleased with our performance for the quarter,” said Chairman and CEO Lloyd C. Blankfein, in a press release. “Our strong client franchise across our businesses drove generally solid results. Still, the potential for macroeconomic instability was felt in the quarter and constrained overall corporate and investor activity. We continue to be very focused on controlling our costs and efficiently managing our capital.”
In terms of sales by segment, the company said its institutional client-services group increased revenue 10% year over year to $5.1 billion; investing and lending revenue grew 8% to $2.1 billion, while investment management sales rose 12% to $1.3 billion. Investment banking revenues jumped 36% to $1.57 billion in Q1’13.
8th Place
RAYMOND JAMES FINANCIAL (RJF)
Raymond James had net income for the quarter ended March 31 of $80 million—up 16% from $69 million a year ago. On an EPS basis, its results improved 8% to $0.56 per share vs. $0.52 per share in the year-ago period. (Excluding special items, earnings were $0.68 per share on net income of $96.5 million.)
Revenues for the St. Petersburg, Fla.-based broker-dealer were $1.14 billion, a jump of 31% from the year-ago period. The sales results topped analysts’ expectations and reflect, in part, the addition of results produced by some 900 advisors and other employees of Morgan Keegan, which the company acquired last year.
The Private Client Group reported fees-and-commissions growth of about 31% over last year to $615.2 million. Sales for the group were $726.8 million, an increase of 28% year over year. Pre-tax income for the group grew 14% from last year to $52.7 million.
The headcount for advisors in PCG worldwide was 6,297—up from 6,289 as of Dec. 31 and 5,396 a year before. In the United States, the unit includes 5,431 independent and employee reps, a slight increase from 5,427 in the earlier quarter and a jump of about 900 from 4,532 in March 2012 (before the Morgan Keegan purchase).
7th Place WELLS FARGO (WFC)
Wells Fargo & Co. (WFC), the nation’s largest mortgage lender, reported $5.17 billion in profits, up 22% from last year’s $4.25 million, with EPS of $0.92 vs. $0.75 a year ago, a jump of 23%.
Its retail-brokerage operations had client assets of $1.3 trillion, up 7% from the prior year. Managed-account assets increased $46 billion, or 16%, from the prior year, driven by strong net flows and market performance, the bank says.
The unit also experienced strong deposit growth, with average balances up 13% from a year earlier.
The wealth management segment had client assets of $208 billion, a 3% year-over-year boost, with average deposit balances up 7%.
Total revenue at Wells was down 1.7% to $21.26 billion after the bank took a 2.6% hit to its mortgage business, and low interest rates hurt profitability despite an 8% rise in deposits, analysts said.
“Wells Fargo delivered outstanding first-quarter 2013 results for our shareholders,” said Chairman and CEO John Stumpf in a statement. “Quarterly earnings and EPS increased at double-digit rates compared with first-quarter 2012, while loans and deposits demonstrated continued growth in a challenging economic environment.”
Wells’ Wealth, Brokerage and Retirement unit reported net income of $337 million, up 14% from a year ago but down 3% from Q412. Client assets for the retail brokerage were $1.3 trillion, up 5% quarter on quarter and up 7% year on year.
Financial advisors in the retail brokerage were reported at 15,354, flat from Q4’12 and up 1% from a year ago.
Managed-account assets increased $46 billion, or 16%, from the prior year, driven by strong net flows and market performance, the bank says. The unit also experienced strong deposit growth, with average balances up 13% from a year earlier.
6th Place
CITIGROUP (C)
Citigroup (C) reported a first-quarter profit of $3.8 billion, or $1.23 a share, topping analysts’ estimates by $0.05, thanks to its ability to cut costs and unload troubled assets. These results represented a 31% improvement in net income and a roughly 30% jump in EPS.
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