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Summary Of US Banks', Wealth Managers' Financial Results - Q4, Full-Year 2020
25 January 2021
Citigroup In the second quarter of 2020 PNC divested its entire 22.4 per cent equity stake in BlackRock. Net proceeds from the sale were $14.2 billion.
Citigroup reported net income for the fourth quarter 2020 of $4.6 billion, on revenues of $16.5 billion, down from of $5.0 billion, and revenues of $18.4 billion for the same quarter in 2019.
Private bank revenues at the US-listed bank were $894 million, rising by 6 per cent on a year ago, driven by “strong client engagement”, particularly in capital markets, as well as improved managed investments revenues and higher lending.
For all of 2020, Citigroup reported net income of $11.4 billion on revenues of $74.3 billion, compared with net income of $19.4 billion on revenues of $74.3 billion for the full year 2019.
The asset and wealth management arm, which includes its private bank, reported a fall in net income for the fourth quarter of 2020, at $786 million, against $801 million a year earlier, or down by 10 per cent. Assets under management rose, however. Net revenues at this division rose to $3.867 billion, up by 9 per cent year-on-year, in Q4. Non-interest costs rose by 13 per cent on a year ago to $2.756 billion. Revenues were driven by higher performance and management fees as well as higher deposit and loan balances. This was offset partly by compressed deposit margins.
Assets under management stood at $2.7 trillion, a rise of 17 per cent, driven by cumulative net inflows into liquidity and long-term products, as well as rises in market levels. There were $33 billion into long-term products and outflows of $36 billion from liquidity products in the quarter.
In total, there were 6,876 wealth management client advisors at the end of 2020, up from 6,615 a year earlier. The wealth and asset business at the US bank had a pre-tax margin of 28 per cent. JP Morgan said that it had the best full-year results ever for asset and wealth management revenue, net income, total client asset flows, among other metrics. For JP Morgan as a whole, net income rose to $12.13 billion, from $8.52 billion a year earlier. Non-interest costs fell slightly to $16 billion, down from $16.3 billion a year earlier.
Goldman Sachs reported a 13 per cent rise in net earnings, applicable to common shareholders, at $8.915 billion in the year ended December 31, 2020. Total net revenues last year came in at $44.56 billion, up from $36.546 billion a year ago. Provision for credit losses rose by about three times in 2020 amid fears about the impact of the global pandemic, standing at $3.098 billion in 2020, up from $1.065 billion in 2019. Pre-tax earnings rose by 18 per cent year-on-year reaching $12.479 billion.
Within the consumer and wealth management business division, wealth management revenues were $1.305 billion in the fourth quarter of 2020, up from $1.18 billion a year earlier and up from $1.165 billion in the third quarter of 2020. Private banking and lending net revenues rose to $242 million in Q4, 2020, up from $194 million a year earlier.
For the full year, net revenues in wealth management were $4.78 billion, rising 10 per cent higher than 2019, primarily reflecting higher management and other fees, the impact of higher average assets under supervision, higher transaction volumes and the impact of the full-year consolidation of GS Personal Financial Management; this was partially offset by a lower average effective management fee due to shifts in the mix of client assets and strategies.
Morgan Stanley's acquisition last year of discount E*TRADE, one of the largest such wealth management deals in years, helped propel its earnings for 2020. It reported net revenues of $13.6 billion for the fourth quarter ended December 31, 2020, compared with $10.9 billion the previous year. Net income applicable to Morgan Stanley was $3.4 billion, or $1.81 per diluted share, compared with $2.2 billion, or $1.30 per diluted share, for the same period a year ago.
The E*TRADE transaction affected comparisons of current year results to prior periods in its wealth segment. That deal was completed at the start of October 2020. In the same month, Morgan Stanley announced that it was buying the asset manager, Eaton Vance. The transactions have consolidated the firm’s presence in the discount brokerage and asset management space.
Full-year net revenues reached a record $48.2 billion compared with $41.4 billion a year ago. Net income applicable to Morgan Stanley for 2020 was $11.0 billion, or $6.46 per diluted share, compared with $9.0 billion, or $5.19 per diluted share, the previous year.
The US firm reported a 20 per cent year-on-year fall in net income applicable to common shareholders, at $702 million in the fourth quarter of 2020. The results were hit by having to pay out $159 billion for litigation, severance, losses on business sales and real estate charges.
On the flipside, the results for Q4 2019 were boosted by gains on a sale of an equity investment, offset by certain other costs, such as litigation.
Investment and wealth management pre-tax income rose by 30 per cent to $311 million, and assets under management stood at $2.2 trillion at the end of December, rising by 15 per cent from the end of 2019. Wealth management client assets rose by 8 per cent to $286 billion.
The Chicago-based group reported fourth quarter net income per diluted common share of $1.12, compared with $1.70 in the fourth quarter of 2019 and $1.32 in the third quarter of 2020. Net income was $240.9 million, compared with $371.1 million in the prior-year quarter and $294.5 million in the prior quarter.
Fourth quarter 2020 results included $55.0 million of pre-tax severance-related charges in connection with a reduction in force, and $11.9 million of pre-tax occupancy expense related to an early lease exit arising from a workplace real estate strategy, and $26.8 million of tax expense related to the reversal of tax benefits previously recognized through earnings. Wealth management assets under management stood at $347 trillion, rising by 15 per cent from a year ago. Total assets under administration stood at $14.532 trillion, rising by 21 per cent.
BlackRock’s total assets under management stood at $8.677 trillion at the end of December 2020, rising from $7.429 trillion a year before. However, the level of inflows decelerated slightly, showing that some of the AuM increase was driven by higher market levels in 2020. There were $126.9 billion net flows in the fourth quarter of 2020 and $390.8 billion for all of last year, against $128.8 billion and $428.7 billion in Q4, 2019 and the full year 2019, respectively.
The financial services group, which provides services including wealth management, said that net income for Q4 2020 came in at $1.456 billion, rising from $1.381 billion a year earlier. In November 2020 PNC announced a definitive agreement to acquire BBVA USA Bancshares, including its US banking subsidiary BBVA USA, from the Spanish financial group BBVA.
In the second quarter of 2020 PNC divested its entire 22.4 per cent equity stake in BlackRock. Net proceeds from the sale were $14.2 billion.