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Morgan Stanley Q4 Profits Double, but Wealth Group Misses Target

By Janet Levaux

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Morgan Stanley’s fourth-quarter profit doubled on large gains in bond and other trading.

Its net income was $1.51 billion, or $0.81 per share, vs. $753 million, or $0.39 per share, a year earlier. Total revenue improved 17% from last year to $9.02 billion in Q4’16.

“There is certainly more reason to be optimistic as we enter 2017 than there was at the beginning of 2016,” Gorman said on a conference call with analysts.

Wealth Results

The Wealth Management operations reported a 6% gain in sales from last year’s fourth quarter with $3.99 billion as of Dec. 31. Net income improved 11% to end the period at $531 million.

The total advisor headcount at the wirehouse stands at 15,763, which is down 93 (or 1%) from Q3’16 and down 126 (or 1%) from Q4’15.

Record average annualized revenue (or fees and commissions) per FA were $1.01 million, up 3% from the prior period and 7% from a year ago.

Client assets stand at $2.1 trillion, up 1% from Q3’16 and 6% from Q4’15. Fee-based assets of $877 billion represent about 42% of total assets, and flows into this asset category were $17 billion in the period.

Client loan balances grew 4% from last quarter and 14% from last year to $73 billion, while net interest income of $984 million improved 11% from Q3’16 and 26% from Q4’15.

The unit’s pretax margin was 22% in the latest quarter vs. 23% in the third quarter of 2016 and 20% in the year-ago period.

However, Gorman says the firm expects this measure “to hit the 23-to-25% range by yearend ’17,” according to the conference call, when he also pointed out that this figure was about 3% in 2005-2006. 

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