- 02Nov
(Reuters) - Morgan Stanley (MS.N) is looking to revive its fixed income, currencies and credit business to boost its market share, but the plan is not likely to result in an immediate boost to earnings, according to Nomura Securities analyst Glenn Schorr.
"We think management has a credible plan to rebuild the trading franchise," wrote Schorr, after meeting with Morgan Stanley executives. But he added that the plan will take time and returns are likely to remain sluggish in the near term so Nomura remains neutral on the stock.
The bank is aiming to boost its market share in fixed income, currencies and credit trading by about 200 basis points, Schorr wrote.
Morgan Stanley has averaged about $2 billion in core revenues from these businesses over the last seven quarters, he wrote, adding that he estimates a quarterly increase of about $750 million could add almost 12 cents in quarterly earnings per share for the bank.
The bank plans to improve these revenues by hiring sales people and traders, particularly for its rates and currencies business, but that will take time. Management believes it is about nine months into a revamp that could take about two years, Schorr wrote.
Morgan Stanley shares were down almost 17 percent this year through Monday.
The bank's trading revenues have languished behind those of its main rival, Goldman Sachs (GS.N), which reported record profits in 2009 largely powered by fixed income, credit and currencies trading. Goldman Sachs shares were down just 4 percent this year through Monday.
