Inside Wall Street’s Blockbuster Second Quarter

It’s getting better all the time.

Wall Street is celebrating a second quarter that delivered stellar earnings for banks, wirehouses and asset managers alike. With major indexes up roughly 10% so far this year, a rising tide is lifting fee revenue even as high-net-worth clients generating more wealth are increasingly looking for sophisticated advice.

Things are going so well, in fact, that JPMorgan Chase CEO Jamie Dimon used his firm’s earnings call this week to make a colorful boast about his wealth unit’s leadership. “It’s a great team of people, which I am fully confident if I was hit by a truck, which is not my preference, we would be fine,” he said.

It’s a Numbers Game

Dimon’s confidence is backed by hard data, a trend mirrored across the wealth management landscape. At JPMorgan alone, profit in the asset and wealth management unit surged 33% year over year to about $2 billion, pushing client assets up 19% to $7.7 trillion. 

Similarly, Citigroup’s wealth division marked its ninth consecutive quarter of revenue growth, with profits leaping 51% year over year to top $580 million. Almost two-thirds of the unit’s new asset growth came from deepening relationships with existing clients.

That massive asset influx was a recurring theme among the wirehouses (UBS reports later this month):

• Morgan Stanley’s wealth and investment management businesses crossed a historic milestone, reaching $10 trillion in total client assets after pulling in a record $148 billion in net new assets this quarter, according to the firm’s earnings report on Wednesday. While just over half of those inflows stemmed from client IPOs in the firm’s workplace channel, meaning they weren’t entirely driven by traditional advised clients, the sheer scale remains impressive. 
• Meanwhile, Bank of America’s global wealth unit, which includes both BofA Private Bank and Merrill Lynch, saw profits skyrocket a whopping 42% to $1.4 billion, fueled by $4.4 billion in management fees. 
• Wells Fargo rode the same wave, reporting a 28% jump in wealth division profit alongside a 15% expansion in client assets. 

On the asset management side, the scale of inflows was historic. BlackRock’s total assets under management grew 22%, driven by a record first-half net inflow of $321 billion as clients clamored for ETFs, private markets and active fixed-income strategies.

Don’t Get Too Excited. It’s safe to say Wall Street is firing on all cylinders. However, there’s always room for caution, as JPMorgan CFO Jeremy Barnum noted during the company’s earnings call that the market is “extremely risk-on” right now. Dimon added that “It’s getting close to as good as it gets. We just don’t know how long it’s going to last.”