Hidden in the numbers released in Bank of America's second-quarter earnings report on Wednesday was a single figure - 27.6 percent - that should delight the wealth management industry. It represents the fat pretax profit margin squeezed from $4.5 billion of revenue at the bank's Global Wealth and Investment Management division. Both the revenue and profit margins were quarterly records and, in a conference call with analysts, Chief Financial Officer Bruce Thompson said that profit margin from wealth management could eventually reach 30 percent. At a time when some investors and analysts are skeptical about Morgan Stanley's goal of realizing a 20 percent profit margin from its wealth business, Bank of America's results raised appreciative eyebrows. Morgan Stanley, which operates the world's biggest retail brokerage unit with about 17,000 financial advisers, reports second-quarter results on Thursday. Michael Mayo, an analyst at CLSA Securities and a notorious critic of financial conglomerates, asked Bank of America executives if they had bulked up their wealth unit's profitability by folding other revenue sources besides traditional brokerage services into the calculation. If not, he said, it could represent the strongest profit ever in the history of Merrill Lynch.
Bank of America bought Merrill Lynch in early 2009 during the depths of the financial crisis. Merrill was then the world's biggest broker.