March 1, 2012 / 7:19 PM / in 6 years

Uncertainty dims wealth management results at Canada banks

* Markets weigh on wealth management profits
    * Banks cite investor confidence as challenge
    * Assets under management inch up

    By Andrea Hopkins	
    TORONTO, March 1 (Reuters) - Investor uncertainty and
weak financial markets made it harder for Canada's big banks to
make money in their extensive wealth management businesses this
quarter, and executives offered only limited optimism for the
months ahead.	
    Canada's two largest banks, Royal Bank of Canada and
Toronto-Dominion Bank, said on Thursday profits in their
wealth management units edged up in the three months ended Jan.
31 from the previous quarter.	
    But global market malaise and the long-term prospect of
continued low interest rates have made it harder for the big
lenders to make money on their mutual-fund, advisory, and
investment services, which in previous quarters have helped
power earnings at Canada's very profitable banks.	
    "Wealth management continues to be impacted by low interest
rates and challenging markets, although we saw improving 	
investor confidence toward the end of the quarter," Gord Nixon,
chief executive at Royal Bank (RBC), the country's largest bank,
said in his first-quarter earnings statement.	
    Net income at RBC's wealth management arm rose 5 percent to
C$188 million ($190.64 million) from the previous quarter but
was down 12 percent from a year earlier as higher average
fee-based client assets failed to offset higher costs and lower
trading volumes.	
    Wealth management profits at TD Bank, the No. 2 Canadian
bank, edged up just 3.6 percent from the previous quarter to
C$144 million, but they were up a strong 10.8 percent from a
year earlier. The results excluded TD's stake in U.S. brokerage
    "The economic uncertainty experienced in the latter part of
2011 and into the first quarter of 2012 has put pressure on
trading volumes in Wealth," TD said in a statement. It forecast
"good growth" in 2012 due to cost controls, however.	
    Earlier this week, No. 4 lender Bank of Montreal 
said profits at its wealth management unit, known as the Private
Client Group, fell 3.9 percent in its first quarter from the
previous quarter to C$93 million, due largely to an employee
compensation scheme that is expensed each year in the first
    Income was up 27 percent year-over-year, as last year's
acquisition of U.S. bank Marshall & Ilsley added assets under
management and profit.    	
    "Higher revenues from our acquisitions and higher than usual
asset management revenues from a strategic investment were
partly offset by lower brokerage revenues as a result of
challenging equity market conditions," BMO said.    	
    "We continue to attract new client assets and are starting
to see some improvement in equity market conditions."	
      Wealth management profits:        
  Bank        Q1/12   Q4/11   Q1/11   y/y     q/q 
              C$mln   C$mln   C$mln   pct     pct 
  RBC         188     179     213    -12.0     5.0 
  TD*         144     139     130     10.8     3.6 
  BMO          93      97      73      27     -3.9  
   * TD excludes TD Ameritrade        
 Assets under management at each of the three lenders edged
higher in the quarter, reflecting a slight improvement in
financial markets and net new client assets.    	
     Assets under management:       
  Bank  Q1/12   Q4/11  Q1/11 
        C$bln   C$bln  C$bln 
  RBC   313     306    305 
  TD    196     189    186 
  BMO   155     150    108
0 : 0
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