Left Menu
Development News Edition

UPDATE 3-Morgan Stanley shares soar after Gorman boosts performance targets


UPDATE 3-Morgan Stanley shares soar after Gorman boosts performance targets
Representative image Image Credit: Flickr

Morgan Stanley lifted its performance goals on Thursday after beating Wall Street estimates by a wide margin, the latest sign that Chief Executive James Gorman's strategic vision for the bank is bearing fruit. Morgan Stanley set the bar higher for expense controls, returns on equity and wealth management profits over the next two years and beyond, according to a presentation on its website.

Its shares soared 5.7% in premarket trading. The bank is now targeting an efficiency ratio of 70-72% over the next two years and under 70% for the long term. That metric, which measures costs relative to revenue, is watched closely by investors.

Morgan Stanley has been meeting its prior goal of 73% or less. Keeping costs under control will help hit another higher goal for returns on equity, which measures how profitably a bank uses shareholder funds.

Morgan Stanley now aims to produce returns on equity of 13-15% through 2022, and 15-17% after that. It has been meeting the prior goal of 10-13%. Finally, the bank is now targeting a 28-30% pre-tax profit margin in its wealth unit over the next two years, and 30% or more after that. It has comfortably been meeting its previous margin goal of 26-28%.

"The company's 'strategic update' ... will ultimately drive performance of the day," KBW analyst Brian Kleinhanzl said in a note to clients. Morgan Stanley announced the new targets after reporting a fourth-quarter profit beat that showed most of its businesses flourishing.

Bond trading, underwriting, and investment management each produced much higher revenue, with M&A advisory being the only area to report a meaningful decline. Analysts have been asking Gorman when he would upgrade his previous goals for some time since the bank was routinely meeting them.

For the full year, its efficiency ratio was 73%, its return-on-equity was 11.7% and its wealth business generated a pre-tax margin of 27.2%. For the fourth quarter, Morgan Stanley's profit jumped 46%, to $2.09 billion, or $1.30 per share, from $1.36 billion, or 80 cents per share, a year ago. (https://reut.rs/37b9508)

Analysts had expected a profit of 99 cents per share, according to IBES data from Refinitiv. The bank's net revenue rose 27% to $10.9 billion.

Sales and trading revenue rose 28% to $3.19 billion. Bond trading sales more than doubled to $1.27 billion, while equities trading declined slightly. Revenue from investment banking, which includes advising on deals and helping corporations raise money, rose 11.2%, buoyed by higher bond and equity underwriting.

Investment management revenue nearly doubled to $1.36 billion, with overall net revenue rising by 27% to $10.86 billion. The bank also reported $172 million in severance costs after slashing its global workforce by 2%. The expense was in line with analyst expectations.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)

Download The Devdiscourse News App for Latest News.


TRENDING

OPINION/BLOG/INTERVIEW

SDG13: How you can reduce global warming by changing your food habits

The mega narratives of various international organizations give the impression that fighting global warming is only a job of government agencies. However, the European Investment Bank EIB has designed a questionnaire which besides making th...

SDG2030: Challenges of technological applications in advancing Global Goals

Application of contemporary and future information technologies may go milestones in advancing sustainable development goals SDGs provided the challenges are overcome and implementation is ensured....

Sustainable Fashion: UNDP wants you to wear properly to reduce Global Warming 

The experts have estimated that the amount of water used to prepare one pair of jeans and a T shirt is sufficient for a person to drink for 13 years....

World Economic Forum suggests 8 Education Models for Future Schools

In a report released on January 14, the World Economic Forum WEF has also picked two examples for each model from throughout the world. The WEF has emphasized that these schools systems would be crucial for Forth Industrial Revolution.&#160...

Videos

Latest News

Canada says there are no firm plans for downloading black boxes from crashed jet

There are still no firm plans for downloading the cockpit and flight data from a Ukrainian airliner which was shot down by Iran 10 days ago, Canadas Transportation Safety Board TSB said on Sunday.The TSB said in a statement that two of its ...

PV Sindhu to take on Gayatri in PBL kick-off clash

World Champion PV Sindhu will take on rising star Gayatri Gopichand in the fifth season of the Premier Badminton League PBL which kicks off at the Jawaharlal Nehru Indoor Stadium on January 20. In the opening encounter, Hyderabad Hunters wi...

Raj Guv exhorts youths to play constructive role in the making of new India

Rajasthan Governor Kalraj Mishra on Sunday called upon the youth to come forward and play a constructive role in the making of a new India. Speaking at the convocation ceremony at Malaviya National Institute of Technology MNIT here, he said...

Industrial Estate being set up in JK's Udhampur: Union minister

Union minister Jitendra Singh on Sunday announced a new industrial estate for Jammu and Kashmirs Udhampur district to attract investors. Singh was speaking during his visit to Udhampur as part of the central governments outreach programme a...

Give Feedback