What Morgan Stanley Has Done With Wall Street's 'Boring' Business Is Just Impressive

James gormanAP PhotoJames Gorman, Morgan Stanley CEO

Thursday morning Morgan Stanley reported its Q2 earnings, and beat analyst estimates by just a hair.

That is in part because Morgan Stanley CEO James Gorman was never too proud to be boring.

In case you missed it — net revenue came in at $US8.61 billion (while estimates put it at $US8.19 billion) and earnings per share hit $US0.60 (while estimates had put it at $US0.56).

That was in spite of the weak trading revenue numbers that have plagued the entire Street this quarter. Morgan Stanley’s came in at $US2.5 billion (where analysts expected $US2.61 billion).

The bank can attribute some of that success to the stunning growth of its wealth management division. Once considered the most boring part of Wall Street’s business, in the wake of the financial crisis it has become a critical profit center.

Morgan Stanley CEO James Gorman saw that shift early, and made it his business to make Morgan Stanley’s wealth management business grow. Profit margins hit 21% since it bought the division as a joint venture with Citigroup (Morgan Stanley bought Citigroup out of the venture last year).

And grow it has. The division has $US2 trillion assets under management. This quarter brought in $US3.7 billion, up from $US3.5 billion this time last year. Pre-tax income came in at $US767 million compared with $US655 million in the second quarter of last year.

Compare that to where the division was two years ago, in Q2 of 2012.

  • Revenue: $US3.3 billion compared to $US3.4 billion in Q2 of the year before.
  • Pre-tax income: $US393 million compared to $US317 million in Q2 of the year before.

In Q2 2010 Wealth Management’s pre-tax income came in at $US207 million.

Not so boring.

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.