Merrill Lynch, BofA Private Bank Suffer 42% YoY Drop in 2Q Net Income

By Alex Padalka July 16, 2020

Bank of America says its global wealth and investment management business saw its net income plummet, even as the unit continued growing its advisor ranks.

In BofA's second-quarter earnings release, Chairman and CEO Brian Moynihan refers to the three-month period as "the most tumultuous period since the Great Depression."

The global wealth and investment management business which consists of Merrill Lynch Global Wealth Management and BofA Private Bank had $3.6 billion in asset inflows in the second quarter, down from $7 billion in inflows in the first quarter and $5.3 billion in the second quarter of 2019, according to the bank’s second-quarter earnings report.

Merrill Lynch added close to 6,000 net new households in the second quarter of 2020, lower than the 7,500 it added in the prior quarter. Private Bank added close to 500 net new client relationships in the latest quarter, compared to 600 in the first, the bank says. 

The second quarter of 2020 was “the most tumultuous period since the Great Depression.”
Brian Moynihan 
Bank of America
The wirehouse meanwhile had 17,888 advisors at the end of the second quarter, up from 17,646 in the first quarter of 2020 and 17,508 in the second quarter last year, according to the report. Advisor productivity at the wirehouse, however, inched down from $1.14 million in the first quarter of 2020 to $1.07 million in the second quarter.

The total number of wealth advisors, which includes those at Merrill Lynch and the Private Bank, was 19,851 at the end of June, up from 19,628 at the end of March and 19,512 in the second quarter of 2019, according to the report. 

Total revenue in the global wealth and investment management business fell to $4.4 billion in the second quarter, compared to $4.9 billion in the prior quarter as well as in the second quarter of 2019 when it was also $4.9 billion, BofA says. 

Provision for credit losses due to a reserve build associated with a weaker economic outlook related to the coronavirus crisis — also dropped, from $189 million in the first three months of 2020 to $136 million in the second quarter of 2020, although that was still far higher than the $21 million BofA reported for the second quarter last year. Non-interest expenses inched down from $3.6 billion in the first quarter of 2020 to $3.5 billion in the second quarter.

Pre-tax income also fell, from $1.2 billion in the first three months of 2020 to $826 million in the second quarter, according to the report. 

As a result, net income in the unit was $624 million in the second quarter of 2020, down from $866 million in the prior quarter and from $1.076 billion in the second quarter of 2019, BofA says. 

Credit balances in the unit rose 1% to $2.9 trillion, which the company attributes to client flows. Loans rose 10% to $182 billion and deposits grew 13%, to $287 billion, according to the report. 

BofA also highlights the wealth and investment management’s efforts in the wake of the Covid-19 pandemic, saying that 77% of its wealth management clients used online or mobile platforms, the number of WebEx meetings hosted by its financial advisors soared 419% and client satisfaction with advisors remained at 93%. The company’s private bank teams, meanwhile, had an average of 1,900 interactions with customers per day during the quarter, according to the report. 

BofA also says that it provided around 334,000 Paycheck Protection Program loans year to date, representing $25 billion in total. Ninety-nine percent of the loans went to firms with fewer than 100 employees, according to the company. 

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