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October 19, 2012updated 04 Apr 2017 3:33pm

Morgan Stanley Q3: pre-tax income down 32%

Pre-tax income at Morgan Stanley’s global wealth management group slid almost a third, or $117m, in the third quarter to $239m on a year-on-year basis.

By Elsa Buchanan

Pre-tax income at Morgan Stanley’s global wealth management group slid almost a third, or $117m, in the third quarter to $239m on a year-on-year basis.

However the wealth unit reported net revenues in the third quarter rose 3% to $3.3bn over the same period.

 

22% rise in fee-based client accounts

Total client assets were $1.8trn at quarter end, while client assets in fee based accounts were $556bn, or 31% of total client assets quarter-on-quarter, according to the bank.

Morgan Stanley also reported a 22% rise in fee-based client accounts on a yearly basis.

In its earnings call on 18 October, Morgan Stanley CEO and Morgan Stanley Smith Barney (MSSB) chairman, James Gorman said: "A key to our future is increased contribution of wealth management to our revenue, profitability, returns and funding stability."

 

Purchase of remaining MSSB stake

Gorman also spoke about Morgan Stanley’s deal with Citigroup to acquire full control of the MSSB wealth management joint venture.

Morgan Stanley purchased an extra 14% of the wealth management joint venture in June, increasing its ownership stake to 65%, and is now set to purchase the remaining 35%.

"We purchased 14% of the wealth management joint venture, while locking in the price and greater flexibility for the remaining 35%. We are beginning to unlock the full potential of the global wealth management franchise", he said.

This week, Citigroup took a $4.7bn hit from selling its 14% stake in the MSSB joint venture and an other-than-temporary impairment of the carrying value of Citigroup’s remaining 35% interest in MSSB.

 

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