Morgan Stanley

“Morgan Stanley is a global financial services firm that provides a comprehensive suite of products to a diverse group of clients and customers including corporations, governments, financial institutions, and individuals. MS currently has three operating segments: Institutional Securities, Global Wealth Management Group, and Asset Management.”

Strengths * Extensive & diversified product portfolio * Ability to leverage global operations * Diversified revenue stream that helps in market cycles
Weaknesses
* Investment banking has high turnover rate, high attrition * Lawsuits related to securitization activities
Opportunities
* Increase in interest rates should add significant net interest income to company’s wealth management * Expansion in other countries * Mergers & acquisitions
Threats
* Government regulation * Volatility of financial markets * Consolidation in the financial services industry post crisis

Morningstar * Debt underwriting has been a standout performer among all investment banks * MS has reduced its estimate of how much risk-weighted assets would be needed to support fixed income business * MS much more focused on risk-adjusted returns on capital – more conservative since crisis * Diversified revenue stream which helps in riding out cycles * Investment banking revenue should experience healthy growth, as companies that held off going public during the recession are now tapping into the capital markets. * Greater confidence in economy and generally high cash levels on corporate balance sheets will lead to increased mergers and acquisition activity. * Imposition of more stringent regulations will likely reduce returns on equity * Limited principle investment activity * Prohibited proprietary trading * Rules increasing transparency of OTD derivatives that could decrease sales and trading margins * Regulatory capital requirements & liquidity