April 18, 2017 / 2:37 PM / 2 years ago

Bank of America's wealth revenue surges on assets under management, fees

NEW YORK, April 18 (Reuters) - Bank of America’s wealth business reported revenue climbed 3 percent to $4.6 billion in the first quarter this year from last year on higher client assets under management and fees, Bank of America Chief Financial Officer Paul Donofrio said Tuesday.

The results come amid the backdrop of the bank’s decision to break from its wealth management peers and wind down its commissions-based retirement business to prepare for a new U.S. Labor Department fiduciary rule set to take effect on June 9.

“These solid results were produced in a period of change for the industry as firms and clients anticipate new fiduciary standards and other market dynamics such as the shift between active and passive investing,” Donofrio said on a call with analysts.

The bank’s Global Wealth and Investment Management division, which includes Merrill Lynch and U.S. Trust, reported long-term assets under managed surged to $29.2 billion in the three months ended March 31 from $18.9 billion in the fourth quarter last year.

The unit’s pretax profit margin, a key metric that can show growth across business segments, rose to 27 percent from 26 percent a year earlier.

Overall, the second-largest U.S. bank’s total revenue rose about 7 percent to $22.45 billion, beating the estimate of $21.61 billion.

Last month, Merrill Lynch partly walked back its statement that it would completely end commissions-paying retirement accounts because the fiduciary rule, which requires brokers to put retirement clients’ interests first, was delayed by 60 days from the original implementation date of April 10.

Nonetheless, the portion of advisers with more than half of their clients enrolled in fee-based accounts, which pay an adviser a flat-fee rather than a commission, continued to rise this quarter, up 2 percent to 66 percent of advisers compared to the prior quarter.

On the call with analysts, Donofrio acknowledged that transactional brokerage revenue continued to decline as part of the firm’s move away from commissions-paying accounts. However, it was offset by the growth in assets under management and fees.

Merrill Lynch revenue rose 5 percent to $3.78 billion from the prior quarter on higher asset management fees and net interest income. (Reporting By Elizabeth Dilts; Editing by Bernard Orr)

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