Wealth / PB Review 1Q23

The 14 banks in this note reported revenue of $38bn in 1Q23, 6% ahead of 1Q22, with growth spread evenly between UHNWI/GFO and lower-end client segments. This is a strong result, but entirely driven by net interest income in high-rate environment; fees declined, especially in brokerage and client-directed/advisory services. A recent survey by Schroders revealed that two-thirds of US retail investors currently keep a third of their retirement savings in cash, rather than invested in the market.

Costs grew, but slower than revenue and only slightly faster than the rate of front office hiring. The aggregated pre-profit grew 16% y/y, with strong growth in AMER and APAC more than offsetting a slight decline in EMEA. Fears of banking contagion, triggered by the collapse of SVB and Signature Bank, seriously impacted valuations of (semi-)specialised wealth managers. On the whole, however, the crisis benefitted big banks in 1Q23. As a group, they lost 6% of their deposits during the quarter: less than expected, and in part driven by clients’ drive to pay down the loans. Excluding Credit Suisse, new money inflows comfortably exceeded $200bn, largely offsetting a negative market impact and limiting a decline in overall AuM.