Wealth management still dragging on bank results
First half wealth management and insurance income for the major banks decreased by $3.1 billion compared to the same time last year, according to the latest data compiled by consulting firm, KPMG.
In an analysis which underlined the dilemma confronting the major banks and their ongoing investment in wealth management, the KPMG report said that while average funds under management (FUM) for the majors increased by $43 billion to $555.7 billion, reflecting positive investment market performance, declining funds under advice (FUA) margins, unfavourable Australian dollar movements, and reduced fee incomes were the main drivers for the softening of the majors’ wealth results.
The KPMG analysis has come at the same time as ANZ looks to dispose of some of its core wealth assets and in the wake of National Australia Bank’s transaction with Nippon Life.
The KPMG analysis noted that the Commonwealth Bank had reported decreases in both insurance and wealth related income streams, with insurance income decreasing by 19 per cent, to $393 million.
It said that, similarly, Westpac had reported lower funds management income largely driven by margin compression and higher insurance claims, including insurance claims from Cyclone Debbie.
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