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BofA Reports 64% Jump in Merrill, Private Bank Profits: Q3 Earnings

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What You Need to Know

  • Meanwhile, Morgan Stanley and Wells Fargo's wealth units report strong earnings and revenue growth, too.

Three of the four wirehouse firms reported earnings Wednesday, all topping analysts’ estimates and boosting profits and revenue — including in their respective wealth management businesses. (UBS will reported third-quarter performance on Oct. 26.)

Bank of America beat estimates as profits rose 58% from last year to $7.7 billion, or $0.85 a share, on a 12% jump in revenue to $22.87 billion in the third quarter. Its latest financial results benefited from the release of a $1.1 billion reserve.

The bank’s wealth management division, which includes Merrill and BofA Private Bank, had a 17% year-over-year increase in revenue, which was $5.3 billion. Its net income jumped 64% to $1.23 billion.

Total client balances were roughly $3.8 trillion, with assets under management representing nearly $1.6 trillion. Asset flows were $14.8 billion in the latest period. 

“We reported strong results as the economy continued to improve and our businesses regained the organic customer growth momentum we saw before the pandemic,” CEO Brian Moynihan said in a press release

The Wealth Management and Investment Management unit had a total of 18,855 advisors as of Sept. 30, including some Consumer Banking professionals. This figure is down 3% from the prior quarter and 8% for last year, “due in large part to an 18-month pause in hiring trainees  during the pandemic, and as the company prepared to launch its new advisor development program,” according to a statement.

While Merrill has usually hired about 2,000 advisor trainees each year, its new trainee program launched in June with 750 advisors, and “hiring is underway,” the bank said. Attrition among experienced Merrill advisors dropped in Q3 to below the firm’s historical average of 4%,  after a slight increase in Q2.”

Wells Fargo 

Wells Fargo on Thursday also beat earnings, and its results were supported by a release of $1.7 billion in credit loss reserves. Net income was $5.1 billion, or $1.22 per share, a 59% increase from $3.2 billion, or $0.70, during the same quarter a year ago.

Its revenue was $18.83 billion, a decline of 7% from last year.

While the bank paid a $250 million fine for its “unsafe or unsound practices” to the Office of the Comptroller of the Currency, “We are a different company today and the operational and cultural changes we’ve made are enabling us to execute with significantly greater discipline than we have in the past,” CEO Charlie Scharf said Thursday in a statement.

As for its Wealth and Investment Management unit, revenue grew 10% from a year ago to $3.6 billion, and net income improved 38% to $579 million. Its advisor headcount, though, dropped by 2% from the prior quarter and 9% from the year-ago period to end the third quarter at 12,552.

The bank said in a statement that its advisor attrition “has slowed since last quarter.” It added that it believes the Q3 drop “represents the last significant quarter of international departures.”

Thought the wealth unit had some advisors retire and depart, it “saw an increase in hiring momentum … with an influx of million-dollar producers joining in channels across Wells Fargo Advisors,” the bank explained.

Morgan Stanley 

Morgan Stanley topped expectations in the third quarter as its results benefited from the firm’s acquisitions of E-Trade and Eaton Vance, as well as other developments. 

Revenue jumped 26% from a year ago to $14.8 billion, and net income grew 38% to $3.6 billion. Earnings per share rose 19% to $1.98.

“The firm delivered another very strong quarter, with robust revenues and improved efficiency,” Chairman and CEO James Gorman said in a statement. “We had standout performance of our integrated investment bank and record net new assets of $135 billion in wealth management.”

Wealth management revenue rose 28% to hit nearly $6 billion, as asset management revenue topped $3.6 billion. Its net income jumped 37% to nearly $1.2 billion.

The firm’s advisor-led client assets stand at $3.65 trillion, with $1.75 trillion in fee-based assets. Fee-based flows were $71 billion in the third quarter.