Pre-Tax Income Rises At Morgan Stanley's Wealth Arm In Q3

Tom Burroughes

21 October 2016

has reported a rise in pre-tax income at its wealth management arm, standing at $901 million in the third quarter of 2016, from $824 million a year before.

Pre-tax margin at the wealth division was 23 per cent. Net revenues for the latest quarter were $3.9 billion compared with $3.6 billion a year ago, the Wall Street-listed firm said in a statement this week.

Asset management fee revenues of $2.1 billion decreased from $2.2 billion a year ago, reflecting lower average fee rates on fee-based accounts.

Transactional revenues of $791 million increased from $652 million a year ago. Results for the current period reflect gains on investments associated with certain employee deferred compensation plans compared with losses in the prior year period.

Compensation expense for the current quarter of $2.2 billion increased from $2.0 billion a year ago, primarily due to an increase in the fair value of deferred compensation plan referenced investments.

Non-compensation expenses of $777 million decreased from $792 million a year ago, primarily on lower professional services costs.

Total client assets were $2.1 trillion and client assets in fee-based accounts were $855 billion at the end of the quarter. Fee-based asset flows for the quarter were $13.5 billion.

Wealth management representatives, of which there were 15,856, produced average annualised revenue per representative of $977,000 in the quarter, the bank said.

Across the whole of Morgan Stanley, the firm reported net revenues of $8.9 billion for the third quarter ended 30 September 2016, compared with $7.8 billion a year ago.