Morgan Stanley Homes In on ROE Target -- Earnings Preview
October 16 2017 - 12:49PM
Dow Jones News
By Liz Hoffman
Morgan Stanley is scheduled to report third-quarter results
Tuesday morning. Here's what you should watch:
1. Flat Earnings
Analysts expect Morgan Stanley to earn 81 cents a share, flat
from the third quarter of last year. A lower share count is
expected to offset a small decline in profits.
2. Lower Revenue
Analysts are projecting revenue of $9.02 billion, up slightly
from $8.9 billion a year ago. Higher wealth and asset-management
revenue should compensate for a decline in trading likely to mirror
those reported by other Wall Street firms this quarter.
3. Return on Equity
Morgan Stanley has been homing in on its year-end target of 9%
to 11% return on equity. It is the last unmet major target laid out
by chief James Gorman. The noted listmaker has previously checked
off others, including a 25% profit margin in the firm's giant
wealth-management business and a minimum $1 billion quarterly
revenue in fixed-income trading.
4. Deposit Growth
Morgan Stanley's bank deposits have been flat to down in recent
quarters. Tax season likely explains a 7% drop in the second
quarter, but the broader stagnation raises questions about the
prospects for Morgan Stanley's effort to become a primary or
secondary bank for its 3.5 million wealth-management clients. J.P.
Morgan Chase & Co. and Citigroup Inc. last week respectively
reported 5% and 3% increases in deposits in the third quarter.
5. Fees
Morgan Stanley has pushed wealth-management clients toward
accounts that charge fees as a percentage of assets, rather than
those based on trading commissions. Fee-based assets hit a record
$962 million last quarter, 43% of the firm's total. Look for that
number to rise.
Write to Liz Hoffman at liz.hoffman@wsj.com
(END) Dow Jones Newswires
October 16, 2017 12:34 ET (16:34 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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