SunTrust Bank's wealth management businesses endured a difficult third quarter, according to the bank's latest financial results released on Friday.
Third-quarter revenue from trust and investment management services slipped to $80 million from $86 million in the same quarter a year ago, a 7% decline. Revenue was up, however, from the prior quarter, rising 7%.
The 7% year-over-year decline was primarily due to a "mix shift in the portfolio and a decline in non-recurring revenue," the bank's parent explained in the earnings release. The increase from the prior quarter was primarily related to seasonally higher tax-related trust fees, it said.
For the first nine months of 2016, trust and investment management generated $230 million in revenue, a significant 10% decline from the $255 million posted in the same period last year.
Assets under management at the end of the third quarter totaled $40.9 billion, up a modest 1% year-over-year.
The performance of the retail brokerage unit was equally disappointing with third-quarter revenue sliding 8% to $71 million from $77 million a year ago. Revenue was also off 1% from the prior quarter.
The decline in brokerage revenue was due to "reduced transaction-related activity as it moves to a retail brokerage managed money product," Aleem Gillani, the bank's CFO explained during the earnings call.
The strategic shift, Gillani said, has been in progress for more than a year and will continue over the medium term. "While it's a negative for near-term retail investment income growth trends, it is a positive for our clients and the long-term health of our business," he said.
The retail brokerage unit's assets under management swelled to $12.5 billion at the end of the third quarter, up a notable 23% year-over-year.
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"We don't measure that. We don't set quotas," Richard Davis told analysts while reporting strong revenue and profit numbers for the bank's wealth management businesses.
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Even though the bank has great confidence in the processes it built, it nonetheless is "re-reviewing everything it's doing," says the bank's CEO.
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Third-quarter revenue from global wealth management surged 10% year-over-year.
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Overall, SunTrust earned $457 million, or 91 cents per common diluted share, in the third quarter, compared with $519 million, or $1 per common diluted share, in the same quarter the prior year.
"I am pleased with our company's performance in the third quarter though as always there are things we can improve upon," William Rogers Jr., SunTrust's chairman and CEO, said during the earnings call.
