JPMorgan money managers hit by market downturn
* Private banking revenue up 10 percent from yr-agoBy Joseph A. GiannoneOct 13 (Reuters) - JPMorgan Chase & Co said its
third-quarter asset and wealth management business earnings
were hurt by turbulent markets and customer withdrawals.The bank also offered a muted outlook for the wealth and
asset management businesses for the coming year.The first major U.S. bank to report third-quarter results
said its asset management and private wealth businesses
together generated $389.5 million in profit on $2.3 billion in
revenue. Earnings fell 8 percent from a year earlier,
reflecting litigation expenses and a bigger payroll.U.S. stocks were hammered by Europe’s spreading debt
crisis, a downgrade of the United States’ credit rating and a
sluggish economy.The July through September period was the worst quarter for
stocks since 2008. The Standard & Poor’s 500 Index fell
by more than 14 percent. U.S. equity declines wiped out $2.2
trillion of market value for the broader Wilshire 5000 indexAmong JPMorgan’s institutional, mutual fund and private
client money managers, revenue fell by 9 percent while profit
slumped 12 percent.Bank officials were not immediately available to comment on
the unexplained litigation costs or a one-time investment
gain.JPMorgan Chase shares were down 5.7 percent at $31.30 near
midday on Thursday.Assets under management across the division fell by $3
billion to $1.25 trillion from a year earlier, reflecting
withdrawals from highly liquid funds and stocks, offset by new
money for fixed-income and alternative investments.Total assets fell by 7 percent from the end of June, driven
by a 17 percent drop in stock assets plus smaller withdrawals
from alternatives, such as hedge funds, and cash-like
investments.Against that backdrop, JPMorgan said it expects
fourth-quarter revenue across asset management to fall,
compared with an already-weak third quarter, as shrinking asset
values lead to lower management fees. Performance will not
rebound next year unless markets recover, the bank said.Business was better at JPMorgan’s three private banking
businesses — a private bank for the ultra rich, private wealth
management for the regular rich, and the JPMorgan Securities
brokerage. Revenue rose 10 percent to $1.3 billion and climbed
1 percent from the second quarter.In private banking client assets under management fell by 5
percent to $276 billion. Assets were little changed from a year
earlier. JPMorgan is the world’s 10th-largest wealth manager,
according to private banking consultancy Scorpio Partnership.Assets under supervision, which includes those controlled
by brokerage clients, under custody and deposits, increased by
6 percent to $738 billion from a year ago, but were down 5
percent in the quarter.The brokerage, formerly known as Bear Stearns Private
Client Services, continued its slow growth as broker ranks rose
by nine individuals to 446 during the quarter. Client advisers
across the division rose by 136, or 8 percent, to 2,418 from a
year earlier.
