Morgan Stanley is set to trim some 1,500 jobs, or 2% of its workforce, by year-end, which may bring the firm down to about 59,000 employees. These cuts should include some managers in sales, trading and research, according to a Bloomberg report, but are focused on the technology and operations divisions.
Reasons for the job cuts include the need for better efficiency in light of a continued slump in trading revenue, which have prompted Citigroup and others to reduce their workforce.
The cuts being carried out also include senior executives in its currency and bond desks in New York and London, the news story said.
Two weeks ago, Bloomberg reported that Morgan Stanley was reviewing possible improper valuations of foreign exchange options and the related concealment of as much as $140 million in losses.
Still, the bank could see its stock end the year up 25% and its fixed income trading produce revenues up by 10% from last year.
In the third quarter, Morgan Stanley’s profits grew 2% to $2.17 billion, or $1.27 per share from a year ago, topping estimates. Sales were $10.1 billion in revenue, which the firm said were the strongest in a decade.
Morgan Stanley’s Wealth Management unit posted slightly stronger profits in Q3 — $962 million, up 5% from a year ago — though sales fell 1% year over year to $4.36 billion. Its pretax margin, though, improved to 28.4% from 27.1% a year ago.
“The Wealth Management business is powerful. At $2.6 trillion of assets, annualizing over $17 billion in revenues, and margins at historic highs — the business is clearly stabilizing the firm,” CEO and Chair James Gorman said in October. “But the most attractive part — every incremental dollar of revenue is arriving at a higher margin than the margin of the existing business.”
Morgan Stanley’s advisor headcount dropped to 15,553, down 80 from the previous quarter and 102 from a year ago. Advisors’ average yearly fees and commissions weakened 1% both from the prior quarter and year-ago period to $1.18 million.
It reported net fee-based asset flows of $15.5 billion in the third quarter — down 4% from last year’s $16.2 billion but up nearly 60% from the prior quarter’s $9 billion.
Gorman said in mid-October that the timing of the industry’s move to zero commissions “surprised” him, though the actual shift itself did not. “I think, given the backdrop with where rates are, it was curious timing, but it is what it is.”
— Check out 13 Best & Worst Broker-Dealers: Q3 Earnings, 2019 on ThinkAdvisor.