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  1. Wealth
July 21, 2009

PB profits down 70% in final quarter 08

By Spear's

The private banking industry’s operating profit pool in Europe last year was 42 percent below the level of 2007, and in the final quarter, even 70 percent below 2007.

The private banking industry’s operating profit pool in Europe last year was 42 percent below the level of 2007, and in the final quarter, even 70 percent below 2007.

As a result, absolute profit levels for private banking were less than those back in 2003, according to the annual European private banking survey by consultants McKinsey.

Profit margins went down from 35 basis points to 26 bps of assets under management, and the cost-income ratio rose from 64 percent to 71 percent, the survey found. In addition, AuM were off by 15 percent last year.

In relative terms, revenue margins declined from 96 bps in 2007 to 90 bps in 2008. In the final quarter of last year, revenue margins were even down to 84 bps.

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