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Morgan Stanley Chief Executive Officer James Gorman warned that the bank would take "longer to achieve'' its medium-term financial targets due to the coronavirus crisis, after its first-quarter profit slumped by 30%.
In January, just before the virus started spreading around the world, Gorman boosted the bank's performance targets and set new goals for cost-cutting, returns on equity and wealth management profits over the next two years and beyond.
In the weeks that followed, the pandemic forced sweeping lockdowns, shuttered businesses, left millions jobless and raised fears of a severe recession, prompting Wall Street banks to set aside billions to cover for potential losses.
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Morgan Stanley said the current economic crisis will push its targets out of its reach and a long-drawn-out crisis could adversely affect its business in the coming quarters.
"As long as the duration and scale of the pandemic and economic slowdown remain uncertain, I expect markets will continue to be fragile. The resulting stress on the global economy is real and will take time to recover,'' Gorman said on a call.
The bank's results capped a tumultuous quarter of earnings reports from big U.S. lenders, which reported sharp declines in profit and boosted their reserves in anticipation of a wave of loan defaults and non-payment of credit card bills.
MORGAN STANLEY PROFIT SINKS 30% UNDER CORONAVIRUS PRESSURE
Morgan Stanley reported a below-target return on tangible common equity in the first quarter, and Gorman cautioned that the bank probably will not meet its previous goals in the next quarter.
"It would be irresponsible of me to recommit to those targets on this call. Those targets are not achievable in the second quarter, they weren't achievable in the first quarter,'' said Gorman, who recently recovered from the illness caused by the novel coronavirus.