A goal of 22-25% in pre-tax margin in Morgan Stanley's (MS +4%) wealth management unit assumes no change in interest rates and a flat stock market, according to the bank's strategic update being presented on this morning's earnings call (webcast). Margin for 2013 was 18%, up from 14% in 2012.
Goal #2 of a ROE greater than 10% In FICC will be driven by cutting exposure to physical commodities (bank recently sold its global oil merchandising business) and cutting risk-weighted assets. Good progress on this in 2013 has Morgan pulling forward one year to 2015 its target of cutting risk-weighted-assets to less than $180B (they closed 2013 at $235B).
Expense discipline, growth in NIM (by growing securities lending, residential and commercial lending, among other lending), and capital returns complete the plan for a ROE of around 10%.