How has the first half of 2021 treated the biggest US banks?

After a big and unpredictable year in 2020, thanks to the Covid-19 pandemic, many are looking to this year’s results to see which banks are best positioned. Patrick Brusnahan writes

State Street registers growth in profit in second quarter

State Street had a positive momentum in Q2 2021, posting a 10% year-on-year rise in its net income and 3% growth in total revenue.

The US-based asset manager’s net income was $763m in the three-months to June 2021, compared to $694m a year ago and $519m in the previous quarter.

The firm also benefitted from a 6% increase in total fee revenue to $2.51bn from $2.38bn, which was driven by strong servicing and management fees.

This was partially offset by lower FX trading services as well as software and processing fees.

However, net interest income slumped 16% to $467m, because of ‘lower investment portfolio yields and a decline in average short-end market rates’. This was partially offset by increase in deposits, noted State Street.

Total expenses of $2.11bn rose 1% from the prior year. The figure was lower than the previous quarter as productivity savings outweighed higher revenue-related costs and planned investments for client onboarding, operations, technology and product innovation.

Investment Servicing AUC/A as of 30 June 2021 stood at $42.6trn, a 27% surge from $33.5trn a year earlier.

The rise was attributed to higher period-end market levels, client flows, and net new business growth.

Net inflows from ETFs and cash led to a 28% jump in Investment Management AuM to $3.9trn.

BNY Mellon Q2 profit up 10%; announces $6bn share repurchase

BNY Mellon has posted a net income of $991m for the second quarter of 2021, an increase of 10% compared to $901m a year ago.

However, total revenue for the quarter ended 30 June 2021 decreased 1% to $3.96bn.

Fee revenue rose by 4% to $3.22bn but net interest revenue plunged 17% to $$645m due to lower interest rates on interest-earning assets.

The banking group’s assets under custody and/or administration (AUC/A) stood at $45 trillion, which represents a surge of 21%.

Assets under management (AuM) increased 18% to $2.3 trillion.

BNY Mellon CEO Todd Gibbons said: “We delivered another strong quarter with EPS of $1.13 on $4bn of revenue, and generated returns on common equity and tangible common equity of 10% and 19%. Fee revenue was up 4%, or 10% excluding the impact of money market fee waivers, reflecting the benefit of higher market levels as well as continued organic growth, driven by higher client activity levels and net new business momentum.

Gibbons also revealed that the company will offer shareholders a dividend of 34 cents per share and will repurchase up to $6bn of common stock through the fourth quarter of 2022.

The Investment and Wealth Management division of the bank posted income before taxes of $326m, a surge of 48% year-on-year.

The division’s revenue rose by 13% to $999m from $886, with Investment Management contributing $700m and Wealth Management contributing $299m.

Bank of America Q2 profit surges to $9.2bn

Bank of America has posted a net income of $9.2bn for the second quarter of 2021, compared to $3.5bn in the year ago period.

However, the banking group’s total revenue, net of interest expense, declined to $21.5bn from $22.3bn in the second quarter of 2020.

For the quarter ended 30 June 2021, provision for credit losses increased to $15bn from $13.4bn a year ago.

The Global Wealth and Investment Management (GWIM) division of Bank of America registered a net income of $991m, up from $623m in the year ago period.

The division’s total revenue increased to $5.06bn from $4.4bn in the second quarter of last year.

Total client balances rose by up $725bn, or 25%, to $3.7 trillion, driven by higher market valuations and positive client flows.

The unit registered AuM flows of $12bn in the second quarter of 2021, the bank said in its press statement.

Bank of America chairman and CEO Brian Moynihan said: “We delivered solid earnings and returned more capital to shareholders during the quarter as we moved to a more open economy. Our team continued to do a great job serving clients, as shown by the increased levels of client activity across all of our businesses.

“More than 85% of our buildings and offices are open, and we’re welcoming our teammates back. This means more face-to-face meetings; helping to increase sales of Consumer products and drive strong household growth in Wealth Management, and increased prospect calling in Commercial Banking.

BlackRock reports 14% increase in Q2 profit; AuM jumps to record $9.49trn

BlackRock has reported a 14% increase in profit in Q2 2021 thanks to strong inflows indicating growing investor confidence about economic recovery.

The company’s assets under management (AuM) also jumped 30% on a year-on-year basis to a record $9.49trn.

The asset manager added around $81bn of new investor money in Q2 2021 driven by continued momentum across the platform.

However, when compared, the figure dropped more than 19% from $100.2bn reported in the same quarter a year ago. The fall was attributed to the $58bn low-fee institutional index outflow related to a single client.

BlackRock’s net income jumped from $1.21bn in Q2 2020 to $1.38bn in Q2 2021.

The company’s revenue was $4.82bn in the three-month period ending 30 June 2021, up 32% from $3.65bn a year ago quarter. Technology services revenue grew to $316m from $278m.

The asset manager’s operating income increased 37% to $1.93bn, while adjusted net income was up 28% to $1.55bn.

Wells Fargo client assets up 20% for Q2 2021

Wells Fargo wealth and investment management saw client assets increase 20% year-on-year to hit $2.1trn in Q2 2021.

In addition, average loans reached $81.8bn and average deposits were $175bn, year-on-year increases of 5% and 6% respectively.

Furthermore, revenue increased 10% compared to the same point last year. This was attributed to higher asset-based fees on higher market valuations, offset by lower net interest income as a result of lower interest rates.

Net income totalled $465m in Q2 2021 for Wells Fargo wealth and investment management, up a staggering 198% year-on-year.

For the bank as a whole, total revenue was $20.27bn, compared to $18.29bn in Q2 2020. Also, net income was $6.04bn, compared to the $3.85bn loss in the same time period in 2020.

Goldman Sachs gains $15.39bn net revenue in Q2 2021

Goldman Sachs has recorded net revenues of $15.39bn and net earnings of $5.49bn in Q2 2021.

Net revenues were up 16% for the quarter year-on-year, attributed to higher net revenues in asset management, investment banking, and consumer & wealth management, but 13% lower than Q1 2021.

For H1 2021, net revenues were $33.09bn and net earnings were $12.32bn.

Diluted earnings per common share (EPS) was $15.02 for the second quarter of 2021 compared with $0.53 for the second quarter of 2020 and $18.60 for the first quarter of 2021, and was $33.64 for the first half of 2021 compared with $3.66 for the first half of 2020.

Furthermore, according to the firm, it ranked first worldwide in announced and completed mergers and acquisitions, worldwide equity, and equity-related offerings, common stock offerings, and initial public offerings for the year-to-date.

Asset management delivered 33% of quarterly net revenue, totalling $5.13bn, thanks to record quarterly net revenues from Equity Investments. This was more than double the amount earned year-on-year.

Assets under supervision increased $101bn during the quarter, including long-term net inflows of $22bn to reach $2.31trn. Firmwide Management and other fees collected a record $1.84bn for Q2 2021.

The consumer and wealth management arm of Goldman Sachs delivered 11% of the net revenue in Q2 2021, a total of £1.75bn. In that number, $1.38bn came directly from wealth management.

Year-on-year, net revenues increased 28% for the arm and up 25% for wealth management specifically.

JPMorgan wealth and asset management income up 74%

Net income for JPMorgan Chase’s asset and wealth management arm (AWM) in Q2 2021 was $1.2bn, 74% up year-on-year.

In addition, net revenue was $4.1bn, a rise of 20% year-on-year. This was attributed to higher management fees and growth in deposit and loan balances. However, this was partially offset by deposit margin compression.

Assets under management (AuM) totalled $3trn in Q2 2021 for JPMorgan, a 21% increase year-on-year.

Managed net revenue for the bank as a whole was $31.4bn, down 7%, and net income was $11.9bn, a $7.3bn increase from Q2 2020. This was pushed by credit reserve releases of $3bn compared to builds of $8.9bn in the year before.

Furthermore, noninterest revenue was $18.5bn, a decrease of 7%, due to lower CIB Markets revenue and $678, of markups on held-for-sale positions in the bridge book recorded in the previous year.

Consumer and community banking net income was $5.6bn, an increase of $5.8bn year-on-year from the loss of $176m in Q2 2020.