Mortgage Expansion for Morgan Stanley

Though Morgan Stanley will remain disciplined in its purchases, the company is looking to expand their mortgage branch. If the market cooperates, a big “if” with current conditions, Morgan Stanley looks to double their earnings and add five points to their margin within the next five years. The company also plans to grow in areas other than the mortgage area, including new add-on teams and bolt-on acquisitions. BlackRock, the huge asset-management company, was a potential buyout. The deal fell through and BlackRock acquired part of Merrill Lynch’s asset-management unit instead.

Improvement is expected to be slow, a smart outlook considering the cooling mortgage market and rising rates. High yield underwriting has been an area where growth has already been seen, moving Morgan Stanley from 11th place to inside the top five this year. A new retail brokerage head, James Morgan, has noted that the first six months of the plan will be used to rebuild management and stabilize the sales force. He hopes that 2007 will show an increase in profitability as well as forward movement in technology, controls and compliance.