Merrill Lynch, BofA Private Bank Net Income Down 34% YoY

By Alex Padalka October 14, 2020

Bank of America says the net income of its global wealth and investment management business rose during the third quarter but was down year-over-year, despite the unit reaching record client balances.

The global wealth and investment management business, which includes Merrill Lynch Global Wealth Management and BofA Private Bank, ended the quarter with a record $3.1 trillion in client balances, up 6% year-over-year, according to the bank’s third-quarter earnings report. The bank attributes the growth to higher market valuations as well as to client flows. 

At Merrill, client balances reached a record $2.6 trillion, up 5% year-over-year. Assets under management in the unit, meanwhile, reached a record $1 trillion, up 6% year-over-year.

Merrill saw the addition of around 3,600 net new households in the third quarter, and more that 17,000 in the first nine months of 2020, while BofA Private Bank added more than 200 net new relationships in the third quarter and 1,400 net new relationships in the first nine months of the year.

However, the entire global wealth and investment management only saw $1.4 billion in asset inflows in the third quarter, down from $3.6 billion in inflows in the second quarter and $5.5 billion in the second quarter of 2019.

Merrill ended September with 17,760 financial advisors, down from 17,888 at the end of June and slightly higher than the 17,657 advisors in the third quarter of 2019.

The total number of wealth advisors, which includes those at Merrill and BofA Private Bank, was 19,673 at the end of the third quarter, down from 19,851 in the second quarter and virtually unchanged from the 19,672 the company had at the end of the third quarter of 2019.

Loans in the unit reached $186 billion, up 9% year-over-year, while deposits rose 15% to $292 billion. Provisions for credit losses due to a reserve build dropped to $24 million in the third quarter, down from $136 million in the prior quarter and even lower than the $37 million posted in the third quarter of 2019.

The global wealth and investment management unit saw total revenues of $4.55 billion in the third quarter this year, up from $4.43 billion in the prior quarter but down from $4.90 reported in the third quarter of 2019. Noninterest expenses, meanwhile, rose to $3.53 billion in the latest quarter, up from $3.46 billion in the prior quarter and $3.41 billion in the third quarter last year.

While the unit’s net income rose from $624 million in the second quarter of 2020 to $749 million in the third quarter, that was still $348 million lower than in the third quarter of 2019.

The bank also highlights its “client support actions” amid the Covid-19 pandemic, with 77% of its wealth management clients using the firm’s online or mobile platform and the number of WebEx meetings hosted by Merrill’s advisors during the third quarter of 2020 rising seven times higher year-over-year. 

BofA chairman and CEO Brian Moynihan also notes the firm’s commitment to racial equality in the wake of the killing of George Floyd in May and the months of nationwide protests calling for justice.

“We … supported our communities by making progress on our $1 billion commitment to drive racial equality and issuing a $2 billion Equality Progress Sustainability Bond,” he says in a statement. 

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