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Morgan Stanley Wealth Unit Profit Rises 30% in Q3

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Morgan Stanley topped earnings estimates with a 20% year-over-year jump in net income to about $2 billion, or $1.17 per share, and a 7% rise in revenue to nearly $9.9 billion for the third quarter.

“In the first half of the year, we produced strong results across the franchise,” according to Chairman and CEO James Gorman. “Despite the seasonal summer slowdown in the third quarter, we reported solid revenue and earnings growth demonstrating the stability of the franchise.”

Wealth Profits Rise

Revenue in wealth management was $4.4 billion, up nearly 5% from last year. Profits, though, soared 30% to $913 million.

“In the quarter, we saw net fee-based inflows, higher fee-based assets and a continued increase in lending balances,” Chief Financial Officer Jonathan Pruzan said on a call with equity analysts.

“The business continues to demonstrate significant operating leverage. On a year-to-date basis, revenues of $13.1 billion are up 5%. … In the quarter, the margin exceeded 27%,” Pruzan added.

The wealth group has 15,655 advisors, which is up 23 from the prior quarter but down 104 from a year ago. Total client assets are $2.5 trillion, while average assets per advisor are $159 million; overall client loans for the unit stand at $83 billion.

Fee-based assets are $1.1 trillion or 45% of total client assets, while net fee-based flows were $16 billion in the third quarter — up 3% from the prior year and 6% from the earlier quarter.

As for advisor fees and commissions, they now average $1.125 million vs. $1.071 a year ago and $1.105 million in the prior period.


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