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Morgan Stanley Sees ROE Climb on Brokers’ Pay Ratio, Commodities

Morgan Stanley will boost profitability as it pays brokers a smaller cut of revenue and the firm’s commodities business earns better returns following sales of two units, Chief Executive Officer James Gorman said.

The company, which earned a return on equity of about 5 percent each of the past two years, has a plan to “in 2015 and beyond, sustainably drive ROE at 10 percent or higher,” Gorman said yesterday at his bank’s investor conference in New York. He didn’t provide a return target for this year. Last year, he said the firm could post a 10 percent ROE by 2014 if regulators allowed it to return a “reasonable” amount of capital to shareholders through dividends and buybacks.