Morgan Stanley's Wealth Arm Reports Rise In Pre-Tax Income

Tom Burroughes

18 January 2017

Wealth management at in the fourth quarter of 2016 logged pre-tax income from continuing operations of $891 million, rising from $768 million in the same period a year ago.

The pre-tax margin in the last quarter was 22 per cent, US-listed Morgan Stanley said of its wealth business, as it reported Q4 and full-year results yesterday. Net revenue in Q4 2016 was $3.99 billion, up from $3.791 billion a year ago. The firm's results follow those last week of JP Morgan, Bank of America and Wells Fargo. Goldman Sachs is due to issue figures today.

Asset management fee revenues stood at $2.2 billion, a rise from $2.1 billion a year ago, it said.

At the end of the quarter, total client assets stood at $2.1 trillion. Client assets in fee-based accounts were $877 billion at the end of the quarter, while fee-based asset flows for the quarter were $17.1 billion.

In terms of headcount, there were 15,763 representatives of the wealth business at the end of last year, producing averaged annualised revenue per person of more than $1.0 million, Morgan Stanley said.

Transactional revenues of $774 million fell from $861 million a year earlier. The firm said results for the latest period reflected lower commissions and revenues linked to investments “associated with certain employee deferred compensation plans”.

For the firm as a whole, net revenues in Q4 came in at $9 billion, a rise from $7.7 billion a year earlier.

“Our quarterly results reflect consistent strong performance, while our annual results show meaningful earnings growth over 2015. We reported solid results in sales and trading and advisory, and record revenues in wealth management, while managing expenses prudently. We are optimistic about opportunities in 2017 and beyond and remain focused on serving our clients and achieving our strategic objectives,” said James Gorman, chairman and chief executive.

Full-year 2016 net revenues were $34.6 billion compared with $35.2 billion a year ago. Net income applicable to Morgan Stanley for the current year was $6.0 billion, or $2.92 per diluted share, compared with net income of $6.1 billion, or $2.90 per diluted share, a year ago.