morganstanley

Morgan Stanley Wealth Sees 20 Percent Profit Surge

Morgan Stanley’s wealth management business had a strong second quarter in which the unit’s net income rose 20 percent over the past year to $561 million, helping to boost the investment bank’s overall performance, while at the same time further shedding the number of advisors employed by the firm. 

Overall, the firm earned $1.8 billion in profits, or 85 cents a share, down from $1.9 billion a year earlier. Revenue rose to $9.7 billion from $8.6 billion, beating analysts’ estimates, according to Seeking Alpha.

“Our view remains positive as recovery further plays out in the U.S., Morgan Stanley’s new chief financial officer, Jonathan Pruzan, said on an earnings call with analysts Monday. Specifically he cited asset management revenues, which were up 3 percent from last quarter driven by higher fee-based client balances from positive flows. Here are the highlights:

 

  • The wealth management unit reported net revenues of $3.9 billion during the second quarter, up 4.7 percent from the $3.7 billion reported a year ago.  The unit accounted for about 40 percent of the bank's total revenue, down from 43 percent in the same quarter of 2014.
  • This helped achieve a pretax margin of 23 percent during the second quarter, up from 22 percent in the first quarter. This is in line with CEO James Gorman’s target of 22-25 percent for the business this year.
  • Total client assets hit $2 trillion this quarter, up almost 2 percent form a year ago and essentially flat sequentially.
  • The firm reported client assets in fee-based accounts hit $813 billion, increasing 7 percent compared to a year ago. Fee based asset flows for the quarter were $13.9 billion.
  • Advisor productivity for the quarter (the average annualized revenue per representative) hit $978,000, up 2 percent from the $959,000 reported last quarter and an increase of 8 percent from a year ago.
  • Yet advisor headcount continued to decline, with the firm reporting 15,771 advisors at the end of the second quarter. This is a loss of 144 advisors from the previous quarter and down 545 advisors reported with the firm a year ago. 
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