Morgan Stanley Sees Quarterly Bond Revenue Well Above $1 Billion

(Bloomberg) -- Morgan Stanley’s goal of generating about $1 billion in average quarterly bond-trading revenue is probably too conservative.

“Well north of a billion on average a quarter I think through the years is definitely sustainable,” Chief Executive Officer James Gorman said Tuesday at an industry conference sponsored by his firm. “The pool has been expanding” as higher volatility and interest rates fuel a rebound, he said.

The bank’s first-quarter revenue from the fixed-income business blew the target away, coming in at $1.9 billion compared with $1.7 billion a year earlier. While Gorman said he doesn’t expect a level that high to become the new normal, the firm has been able to expand since a 2015 restructuring of the business as European rivals retreated.

“If you hang around the hoop, you’re going to eventually get a little lucky,” he said, adding that Morgan Stanley’s market share is about 8 percent to 10 percent.

Electronic trading for bonds is a “major priority,” after Morgan Stanley made strides in that business for stocks, Gorman said.

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