Morgan Stanley hopes to expand its $500 million share buyback program cleared earlier this year, said CEO James Gorman, adding that not doing so would be a disappointment.
"We think the firm has recovered from the crisis, logically, given that we've had a modest [share] buyback, we've had good earnings, you would expect we would increase it," Gorman told CNBC.com on the sidelines of Morgan Stanley's annual Asia-Pacific Summit.
"We can't talk about how much, and it's up to the Federal Reserve to approve, but I think it would be disappointing not to increase," he added.
By the end of September, Morgan Stanley had spent $123 million of the $500 million it was authorized to buy back, according to the Wall Street Journal. This existing plan ends in March, the report said. Large and complex banks are required to seek the Fed's approval to repurchase their stock or pay a dividend to shareholders.
Share buybacks are one of the means through which the bank aims to boost its return on equity (ROE) - a key measurement of a bank's profitability - which stood 6.4 percent in the third quarter, well below the company's 10 percent target.
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Gorman said he believes 10 percent is a realistic goal: "We have a more balanced business model, we have a lot of areas where the firm has upside from where we are, and we're going to buy back stock. I think we've demonstrated very clearly that we have the engines to get there."
While he declined to provide a specific time frame for attaining the target during the interview, Gorman at Morgan Stanley's annual meeting in May this year said he had hoped to get ROE to 10 percent by the end of 2014, according to the Wall Street Journal's MoneyBeat.
Outlook for US markets
While enthusiasm over U.S. equities has triggered concerns of a bubble, Gorman remains positive on the market outlook.
The rally in U.S. stocks has been fueled by a fundamental improvement in the economy, he said, not just easy liquidity conditions.
Contrary to media reports warning that "mom and pop" investors are pouring more money into the stock market, Gorman said he doesn't see evidence of heightened retail participation.
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"We don't see it in our numbers, I don't know which mom and pop investors they are, but we've got a lot of them, and their behavior is pretty modest," he said.
When the U.S. Federal Reserve begins to wind down its $85-per-month bond-buying program, Gorman said markets may react emotionally for a few days. However, he is not expecting a major correction.
"It's [tapering] been well signaled. I think the markets understand what's in store for them," he said.
—By CNBC's Ansuya Harjani; Follow her on Twitter: @Ansuya_H