DBRS Morningstar: Wealth Management Franchises Resilient Despite the Uncertain COVID-19 Environment

Revenues from Wealth Management and Asset management businesses at global firms with major Wealth Management activities (including UBS Group AG (UBSG), Bank of America Corporation (BAC), Morgan Stanley (MS) and Credit Suisse Group (CSG)) remained resilient in H1 2020, despite the global effects of the Coronavirus pandemic (COVID-19). However, all banks set aside higher credit provisions in their Wealth Management divisions in both Q1 and Q2. The resilient performance illustrates the strength of their global WM franchises, which are highly diversified by geography and product.

This commentary focuses on the performance of Wealth Management and Private banking divisions at the major global Wealth Management banks during H1 2020.

Key highlights from DBRS Morningstar’s commentary include:
• Wealth Management Revenues in H1 2020 were resilient but all banks increased credit provisions due to COVID-19.
• Assets Under Management (AuMs) recovered in Q2 and remained similar to end-2019 after experiencing significant drops in Q1.
• We expect Wealth Management businesses to remain resilient in H2 2020 whilst further benefiting from strong relationships with capital markets businesses. However, revenues could be negatively impacted if financial markets experience a significant decline again in H2 2020.

“In the increasingly challenging and uncertain environment, global firms have been able to reinforce their franchises and increase lending volumes. Moreover, WM franchises recorded strong inflows of Net New Money and experienced strong growth of deposit balances, particularly in Q1, as customers decided to hold higher levels of cash in the uncertain market environment” said Maria Rivas, Senior Vice President from the DBRS Morningstar Financial Institutions team.

The commentary focuses on the Wealth Management and Asset Management results of global banks. The full commentary “Wealth Management Franchises Resilient Despite the Highly Uncertain COVID-19 environment” is available at www.dbrsmorningstar.com.