Bank results confirm negativity around wealth management
New analysis of bank financial results has confirmed that the returns being driven by their wealth divisions have failed to live up to long-term expectations.
The analysis, based on the full-year results of the four major banks released to the Australian Securities Exchange (ASX) over recent weeks, was conducted by Ernst & Young (EY), and pointed to the degree to which some of the banks had been looking to either exit or restructure their wealth operations.
EY's Oceania Banking and Capital Markets leader, Tim Dring, said wealth returns had generally not met long term expectations.
"Driven by the need to deliver better returns, some of the banks have either restructured or are restructuring their wealth businesses," he said.
"Capital intensive life insurance underwriting and manufacturing operations have come under review, as banks look for ways to free up capital and improve returns."
"Alongside this, an increased regulatory focus on capital and the financial and reputational cost of conduct cases has provided an added impetus for the banks to re-think their wealth operations," Dring said.
The EY analysis has come in the wake of ANZ flagging the possible sale of its wealth management business and in the aftermath of National Australia Bank (NAB) selling 80 per cent of its MLC insurance operation to Nippon Life.
On Monday, Westpac reported a reduced profit for BT Financial Group, citing a range of issues including increased regulatory and compliance costs.
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