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 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.