Bank earnings season isn't done yet, but Bank of America Merill Lynch is winning the brokerage race so far.
Quarter after quarter, BofA's brokerage unit keeps proving itself a winner for the big bank. The second quarter was no exception for the Merrill Lynch global wealth management unit.
Client assets reached a key milestone of $2 trillion milestone in the quarter. That's up 11% from last year when assets stood at $1.8 trillion.
Revenue came in at a record $4.6 billion, up 2%, and topping every other business segment at BofA with the exception of consumer banking.
Net income was $724 million, making up 32% of Bank of America's total income for the quarter.
With 15,561 financial advisors, BofA's wealth management unit isn't the biggest, but it is the most productive. Each FA generates just over $1 million in annual revenue for the firm. That's a coveted figure in the brokerage industry, and one that only the UBS wealth management unit has matched.
(UBS reports second quarter earnings on July 29.)
Morgan Stanley runs the largest brokerage network by number of FAs with 16,316. CEO James Gorman has shifted the firm's focus from investment banking to wealth management over the last few years in an effort to run a more stable, fee-generating company.
Though its armed with more financial advisors, Morgan's financial advisors are behind Merrill's on many fronts. Net income was $471 million on revenue of $3.7 billion. Revenue production per advisor was $908 million.
Further, Morgan has to reach Gorman's stated pre-tax profit goals of 22% to 25%. In the most recent quarter, the figure stood at 21%.
BofA was quick to note that its pre-tax margin stoff at of 25.1%, its 6th consecutive quarter of 25+% levels.
Morgan does however match BofA's client asset levels. The New York firm reported $2 trillion in assets for the quarter, up 13% from last year.
Across the country in San Francisco, Wells Fargo, which manages the third largest brokerage firm behind BofA, said its brokers generated $544 million in profits on $3.6 billion in revenue.
Wells Fargo is also flirting with the $2 trillion mark with brokerage assets coming in at $1.978 trillion.
One thing Wells has that other brokerage investors envy this year? A killer stock. Shares of Wells Fargo are up 12% while the S&P500 is up 6.5%. BofA shares are down 2%, and Morgan Stanley stock is up 3% year to date.
