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Morgan Stanley’s Wealth Management Division Sees Slower 2Q Growth

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Innovative offerings

Morgan Stanley (MS) grew its revenues in the Wealth Management division to $3.88 billion, up from $3.7 billion in the same quarter a year ago. Pretax income expanded to $885 million from $763 million. The division’s growth was steady, mainly because of its fee-based program.

Asset management revenues increased to $2.2 billion from $2.1 billion a year ago, mainly driven by higher fee-based client balances from positive flows. International asset inflows stood at $13.9 billion, bringing total fee-based client assets to $813 billion, which represents 40% of client assets.

Morgan Stanley’s transactional revenues fell to $872 million in 2Q15, down from $991 million a year ago. This decline was primarily due to lower revenues from investments associated with certain employee-deferred compensation plans and lower levels of new issue activity.

Morgan Stanley’s total assets under management stood at $813 billion in 2Q15. Here’s how its peers in asset management compare:

  • The Carlyle Group (CG) – $193 billion
  • KKR & Co. (KKR) – $98 billion
  • BlackRock (BLK) – $4.72 trillion
  • Apollo Global Management (APO) – $163 billion

Together, these companies form 1.36% of the Financial Select Sector SPDR Fund (XLF).

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Bank program

Morgan Stanley’s US bank’s net interest revenue increased by 7% to $737 million, mainly due to growth in lending and a realization of the forward curve in the investment securities portfolio. The bank’s profit before tax stood at 23%.

Wealth management lending balances grew by $4 billion or 10% from the prior quarter. However, deposits at the bank were down by 1% to $132 billion, compared with the previous quarter. The bank’s non-interest expenses were essentially flat compared to last quarter’s non-interest expenses. And the compensation ratio was 57%, driven by increases in non-compensable revenues.

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