Morgan Stanley acquirement beats; Smith Barney pays off
NEW YORK (Reuters) – Morgan Stanley acquaint stronger-than-expected annual acquirement and retail allowance accumulation jumped, acceptance its action of bolstering businesses that are beneath threatened by tougher adjustment afterward the cyberbanking crisis new era hats.
While fourth-quarter accumulation fell abbreviate of forecasts, investors focused on the bank’s stronger after-effects in areas such as asset management. Morgan Stanley shares rose 4.6 percent dc hats.
In 2009, afterwards the cyberbanking crisis brought the coffer to the border of failure, Morgan Stanley began abbreviation its assurance on trading and adventurousness for profit.
It began apperception instead on areas such abundance management, area acquirement is added stable. As allotment of that move, it bought a authoritative pale in Citigroup’s retail allowance business, now a collective adventure accepted as Morgan Stanley Smith Barney.
Those moves assume to be paying off for Arch Executive James Gorman, who was originally assassin by Morgan Stanley to baby-sit the bank’s retail allowance business.
Morgan Stanley Smith Barney generated almanac accumulation during the division and was amenable for about 20 percent of the bank’s profit.
“There were some acceptable signs in these after-effects and, if the retail broker is added alive this year, it could absolutely advice Morgan Stanley,” said Anton Schutz, admiral of asset administrator Mendon Capital, which owns Morgan Stanley shares.
Asset management, a business that was continued a anemic performer, has angry about beneath Greg Fleming, who abutting Morgan Stanley in February 2010 and is now set to baby-sit retail brokerage, too. Asset management’s acquirement rose 68 percent from a year beforehand and the business generated about 20 percent of the bank’s income.
Morgan Stanley’s about-face stands in adverse to battling Goldman Sachs Group Inc, which generated about 82 percent of its fourth-quarter acquirement from investment banking. Goldman shares fell 4.7 percent afterwards the coffer acquaint black annual after-effects on Wednesday.
“(Morgan Stanley is) starting to attending a little able with these added abiding acquirement businesses,” said Adrian Cronje, arch investment administrator at Atlanta-based Balentine, a abundance administration firm.
EARNINGS MISS
Still, excluding $668 actor of pretax assets from the auction of its investment in China International Capital Corp, Morgan Stanley’s balance fell abbreviate of analyst expectations.
The second-largest U.S. investment coffer said actor accumulation was $600 million, or 41 cents a share, up from $376 million, or 29 cents a share, a year earlier.
Adjusted balance were 26 cents a share, beneath analysts’ boilerplate anticipation of 35 cents, according to Thomson Reuters I/B/E/S.
Investors looked accomplished profits, though, and focused on Morgan Stanley’s potentially bigger accession for a apple of tougher cyberbanking regulation. Morgan Stanley’s shares were up $1.27 at $29.02 at the abutting on Thursday.
New laws in the United States and away abuse to abate the advantage of abounding acceptable investment cyberbanking businesses. Abundant derivatives trading, for example, is accepted to move to exchanges, which will abate accumulation for banks that acclimated to bout up buyers and sellers themselves.
Under the Dodd Frank U.S. cyberbanking ameliorate bill, banks will not be able to do as abundant trading for their own accounts, which could cut into profits. Morgan Stanley said endure anniversary it will circuit off its proprietary trading business, which trades the firm’s money, in 2012.
In October, Morgan Stanley said it planned to advertise a majority pale in FrontPoint Partners, a barrier armamentarium manager, to its portfolio managers. That accord was declared to abutting in the fourth quarter, but is now set to abutting in the aboriginal quarter, Morgan Stanley said.
A key administrator at FrontPoint, Steve Eisman, was appear to be answer abrogation the company. He told Reuters he wants added ascendancy over his fund.
Even if banks will do beneath trading for themselves, admiral accept bidding some optimism about the angle for trading on account of customers.
“Clearly, there accept been some structural changes in assertive locations of the markets. The absolute catechism is, are they permanent, are they temporary,” David Viniar, arch cyberbanking administrator at Goldman Sachs, said during a Wednesday appointment call. “I don’t appear to accept a lot of things are permanent.”
But some investors accept questioned whether trading volumes could be depressed for some time.
Morgan Stanley acquaint fourth-quarter acquirement of $7.81 billion, topping the boilerplate Wall Street anticipation of $7.35 billion.
Even with Thursday’s gains, the company’s shares barter at about 0.9 times their book value, or their net accounting value. Goldman Sachs shares, in contrast, barter at about 1.3 times their book value. Some investors accept Morgan Stanley’s appraisal has allowance to move afterpiece to Goldman’s.
TRADING
The coffer suffered from the aforementioned trading angst that hit JPMorgan, Goldman Sachs and Citigroup Inc. Morgan Stanley’s all-embracing trading acquirement fell 38 percent and it absent money in fixed-income trading.
Morgan Stanley hopes trading volumes will advance as the all-around abridgement improves and hopes it can addition bazaar share, she said.
On a appointment call, CEO Gorman said the coffer has added plan to do in anchored income. Morgan Stanley assassin hundreds of traders over the accomplished year as allotment of a multiyear accomplishment to addition its band trading business, which is baby about to rivals.
The coffer beforehand this ages said Jack DiMaio, all-around arch of interest-rate, bill and article trading, was leaving, and that arch accident administrator Kenneth deRegt was acceptable all-around arch of anchored assets sales and trading.
Morgan Stanley Smith Barney generated assets for Morgan Stanley of $166 actor in the fourth quarter, up from $29 actor a year earlier. Morgan Stanley holds a 51 percent pale in the collective venture.
For the abutting as a whole, about 51 percent of acquirement was paid out to advisers as advantage in 2010, down from 62 percent a year earlier nba hats.
Morgan Stanley said it is deferring added of employees’ pay nfl hats.
Processing your request, Please wait....
