Morgan Stanley sets $12 billion profit goal for wealth unit

Morgan Stanley is betting its wealth management juggernaut is only just getting started as it outlined a plan to nearly double profit from the business in coming years.

The bank’s new long-term goal of more than $12 billion in pretax earnings will come from a mix of asset growth, more lending and expanding markets, according to co-president Andy Saperstein. 

“Over the past decade, we have completely transformed the business,” Saperstein said Wednesday at a conference hosted by AllianceBernstein Holding. “It’s only gotten us to the starting line. We are poised for a period of accelerating growth.”

Saperstein gave a much gloomier forecast for the bank’s sales and trading and investment-banking operations. The bank began eliminating about 3,000 jobs this month amid a slowdown in dealmaking.

Saperstein, 56, is one of three men in the running to replace Chief Executive James Gorman, who earlier this month outlined his plan to step down within a year. Gorman is in his 14th year atop the New York-based bank after having climbed to the CEO spot in 2010.

Saperstein runs the firm’s $4.6 trillion wealth management business, which has seen significant growth in the past 10 years and posted $6.6 billion in pretax profit last year. The business has targeted bringing in $1 trillion in net new assets every three years.

Analysts estimate the firm will post $10.8 billion in 2023 profit, down from $11.4 billion last year. Investment-banking fees are expected to slip below last year’s $5.24 billion, which was half what the bank posted in 2021 amid a dealmaking frenzy.

Saperstein’s upbeat outlook for the wealth unit contrasted with his take on the state of play in the investment bank.

“Sales and trading is softer this quarter,” he said. “Results will be notably down year-over-year.”

The executive also said investment banking is “very challenged. As an industry we have been in a sustained trough since last year.”