Bank of America’s Merrill and other wealth management units hit a record for assets under management, driven in part by $11 billion in asset inflows in the second quarter.
Bank of America reported $4.6 trillion in assets under management for its Merrill, private and consumer investments divisions on Tuesday. That figure, the banking giant said, was up 11% year over year.
Bank of America CEO Brian Moynihan said in an earnings call Tuesday that much of the growth is driven by new clients.
“In wealth management we added another 6,100 new relationships this quarter, and in our commercial businesses we added thousands of small businesses and hundreds of commercial banking relationships,” Moynihan said.
Bank of America’s Merrill had adopted the practice in previous quarters of discussing its own results separately from those of its banking parent. No such call was scheduled for Tuesday, though, mainly because Merrill is merely continuing with growth plans laid out in previous quarters.
“Merrill delivered near record revenue in the second quarter,”
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Much of Merrill’s growth plans have centered on getting investors to start banking relationships with its parent company. Bank of America reported Tuesday that more than 30,000 wealth management clients opened checking, savings or similar accounts in the second quarter.
Merrill pitches its Bank of America connection as an asset enabling it to offer a full array of financial services. It also presents additional ways to generate money for its parent company and provides a means of making assets “sticky,” or difficult to move to a rival firm. Clients who have many different types of accounts with a single institution, so the thinking goes, will be inclined to stay put rather than go through the hassle of moving all of that elsewhere.
Bank of America reported Tuesday that 61% of its wealth management clients have a banking relationship with the firm.
“In our wealth management business, we’re seeing more banking accounts being opened to complement the investment business,” Moynihan said. “Importantly, these clients also recognize the ease of our digital banking capability. Seventy-five percent of our new accounts … were opened digitally.”
Revenues and profits
Bank of America’s Global Wealth & Investment Management division, which includes Merrill and the firm’s private bank, reported $1 billion in net income on $5.6 billion in revenue for the quarter. Those figures were up 5% and 6%, respectively, year over year.
Bank of America noted in an earnings presentation that its wealth revenue was driven by a 14% increase in asset management fees, which came in at $3.3 billion in the quarter. Those fees, in turn, were buoyed by nearly $11 billion in asset inflows as well as investment gains.
Of the total $5.6 billion revenue haul, Merrill Wealth Management contributed more than $4.6 billion, a figure up 6% year over year. And the private bank contributed $951 billion, up 5%.
Client assets
Bank of America reported having $3.37 trillion in assets under management at Merrill and $640 billion at its private bank at the end of the second quarter. Those figures were up by 6% and 5%, respectively, year over year.
Expenses
The Global Wealth & Investment Management division reported nearly $4.2 billion in non-interest expenses in the second quarter. That figure, up nearly 7% year over year, was “driven by revenue-related incentives.”
Remark
Bank of America
Despite a recent return to recruiting, the firm is still leaning heavily on training to increase that number.
“In wealth management, we continue to invest in our advisor development program,” Moynihan said. “It’s grown to 2,300 teammates, allowing us to continuously add more than teammates to our 18,000 strong investment class financial advisory across our wealth management businesses.”
