Strong Wealth Management Results Boost Morgan Stanley's Performance

Tom Burroughes

21 January 2013

Morgan Stanley said its global wealth management group reported pre-tax income from continuing operations of $581 million in the fourth quarter of 2012, more than double the figure of $238 million in the fourth quarter of 2011.

The quarter's pre-tax margin was 17 per cent, the US-listed firm reported late last Friday. Net revenues for the current quarter were $3.5 billion compared with $3.2 billion a year ago. Income after the non-controlling interest allocation to Citigroup and before taxes was $474 million.

Asset management fee revenues of $1.9 billion increased 16 per cent on a year ago, primarily reflecting an increase in fee-based assets and positive flows, Morgan Stanley said.

Transactional revenues of $1.1 billion decreased 3 per cent from a year before, reflecting reduced commissions and fees and a decrease in principal trading revenues driven by lower gains from investments associated with the firm's deferred compensation and co-investment plans, offset by higher investment banking revenues.

Total client assets were $1.8 trillion at the end of last year. Client assets in fee-based accounts were $573 billion, or 32 per cent of total client assets. Global fee-based asset flows for the fourth quarter were $3.7 billion.

There were 16,780 representative staff at the firm at the end of the quarter, relatively unchanged from the previous three months. The average annualised revenue per global representative was $824,000 and total client assets per global representative of $106 million increased 13 per cent and 14 per cent, respectively on the same three months of 2011.

For the firm as a whole, Morgan Stanley reported net revenues of $7.0 billion for the fourth quarter compared with $5.7 billion a year ago. Income from continuing operations was $573 million, or $0.28 per diluted share, compared with a loss of $222 million, for the same period a year ago. (The prior year fourth quarter included a pre-tax loss of approximately $1.7 billion, or a loss of $0.58 per diluted share, related to the comprehensive settlement with MBIA Insurance Corporation.)