In order to further boost shareholders' value,
) is expected to seek an increase in share repurchase
authorization when it submits the new capital plan with the
Federal Reserve in 2014. As per a report in The Wall Street
Journal, the news has been confirmed by internal sources well
versed with the matter.
Earlier, in July, Morgan Stanley received the Fed's approval for
share buybacks of up to $500 million through Mar 31, 2014.
Subsequently, in third quarter 2013, the company repurchased
nearly 4.5 million shares worth $123 million.
The aforementioned buybacks were the first of their kind since
the financial crisis. During the financial meltdown Morgan
Stanley reduced its quarterly dividend by nearly 81.5% to 5 cents
and suspended its share buyback program. The current move
therefore reinforces shareholders' confidence in the stock and
depicts Morgan Stanley's improved capital position as well.
As per the provisions of the Dodd-Frank financial-services law,
banks (with consolidated assets of $50 billion or more) are
required to submit their capital plans with the Fed for approval
every year. Most of the banks including The
Goldman Sachs Group, Inc.
JPMorgan Chase & Co.
), SunTrust Banks, Inc., Capital One Financial Corp. and Zions
Bancorp. have been enhancing shareholders' value since 2011.
However, given its priority to purchase the remaining stake in
its joint venture (JV) with
) - Morgan Stanley Wealth Management (MSWM) - the company did not
ask for any additional capital deployment. In Jun 2013, the
company purchased the remaining 35% stake in MSWM JV, which
positively impacted its third-quarter 2013 results.
Morgan Stanley has been generating positive earnings surprise in
the trailing four quarters with an average beat of 25.95%. This
looks impressive as increased profitability enhances the
possibility of dividend hikes in the future, provided the company
receives the Fed's consent for the same.
Morgan Stanley currently carries a Zacks Rank #3 (Hold).
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