Morgan Stanley has raised a key financial target for its wealth-management business, the group’s chairman and CEO James Gorman said in a presentation to investors. He also said restructuring the commodities business is a top priority.
Morgan Stanley’s wealth management unit will hit a pre-tax profit margin of 20% to 22% in 2015, said Gorman, provided the lender’s deal to buy the rest of Citigroup’s Smith Barney retail brokerage is approved by regulators.
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The bank issued a 20% target when it first announced plans to acquire Citigroup’s Smith Barney brokerage business. Morgan Stanley later scaled back its ambitions to a ‘preteens’ margin by mid-2013 due to unexpected costs and delays related to the merger.
Gorman noted that the commodities business has grown "complicated" amid tougher regulations and a slow cyclical period for trading revenues. "We continue to explore strategic structures that may make sense, especially focused on physical commodities," he said.
Gorman also said that Morgan Stanley was committed to improving its fixed-income business and is working towards achieving a 10%return on equity in the business.
Morgan Stanley’s Global Wealth Management Group reported pre-tax income from continuing operations of US$597 million for the first quarter of 2013 compared with US$403 million in the year ago quarter.
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By GlobalDataThe divisison’s net revenue for the quarter was US$3.5 billion compared with US$3.3 billion a year ago.
