Pick,
Pick is a Morgan Stanley lifer who joined the firm in 1990. Gorman, who was CEO for 14 years, has moved into the role of executive chairman. And two other longtime staffers who competed with Pick for the CEO job have moved into expanded roles:
"Our shared Morgan Stanley experience, having all lived through the 15-year transformation, gives us a lens into where we come from and where we are going," Pick said during the call.
And where the firm is going is all about operating as an "integrated" investment bank, with a business portfolio that provides "more stable profitability," he said.
"At its center, it is acting as a trusted advisor to clients [and] helping them raise, allocate and manage capital. It is what we do. We are a global leader, and we are really good at it," he said.
He later added, "I think the main message I would want to convey today is that while there's change in leadership after 14 years of James' stewardship, there's not a change in strategy."
Industry observers have been keenly watching to see what, if anything, might shift with Pick now in the CEO seat. On Tuesday, the bank trimmed four of its long-term financial goals, though it didn't specify the time frames.
It now projects growing client assets to $10-plus trillion dollars, a change from a year ago when it thought it would gain $1 trillion of assets every three years. Client assets were currently $6.6 trillion on Dec. 31.
Morgan Stanley also is aiming for an efficiency ratio of 70%, not the "less than" 70% that it laid out last year at this time. The full-year 2023 efficiency ratio was 77%, the company reported Tuesday.
Moreover, the company slightly lowered its expected return on tangible common equity ratio to 20%, down from 20-plus% a year ago. Full-year ROTCE for 2023 was 12.8%
It similarly lowered its anticipated wealth management pretax margin to 30%, down from 30-plus%. Its wealth management pretax margin was 24.9% for 2023, it reported.
When asked by an analyst to explain the reason behind making those adjustments, Pick said they reflect the management team's confidence in hitting those targets.
"Stylistically my view was — and the team shares it — that $10 trillion of client assets, we should get there and just keep on going," Pick explained. "But the other three, effectively in removing the pluses, it's simply reaffirming that those numbers will be hit."
"It will take time," he added. "There will be the challenges you would expect in making that happen, and of course we need economic conditions to line up in a favorable way, but over time those are the firmwide goals. And we wanted to be very specific about that for you."
For the quarter,
Overall, net revenue for the quarter totaled $12.9 billion, up about 1.2% from the same quarter in 2022, the company reported Tuesday. Net income was $1.5 billion, down 32% year-over-year. Earnings per share were 85 cents, lower than the average estimate of $1.07 from analysts surveyed by FactSet Research Systems.
During the fourth quarter, Morgan Stanley set aside $3 million in provisions for credit losses, down from $87 million in the year-earlier period, it said.
Jane Fraser says this year will be "critical" for the megabank, which is engaged in a massive, multiyear restructuring that involves cutting 20,000 jobs by the end of 2026.
Compensation expenses were $6 billion, up from $5.6 billion in the year-ago quarter. Noncompensation expenses, which include items such as information processing, real estate and equipment, and marketing, also rose, from $4.3 billion in the year-earlier period to $4.8 billion in late December.
In a research note Glenn Schorr, an analyst at Evercore ISI, said the fourth quarter wasn't "great" but added that there are "some clear signs of positive momentum building" in 2024, such as investment banking, wealth management flows and higher wealth management deposits.
The stock was down about 4% as of Tuesday afternoon.
