Investors of Morgan Stanley are awaiting the decision of the US Federal Reserve if it will permit the lender to give back capital to shareholders, Reuters reported.

If given the go-signal, this will be the first time that the Wall Street bank will do so since the financial crisis. However, analysts and investors said that even if the Fed will allow the bank to return capital through a share buyback and even possibly increase dividend, it is not likely to meet the shareholder return on equity target that Chief Executive James Gorman originally intended for 2014, the report said.

Return on equity or ROE is a measure of the profit that a lender makes with shareholders' money. Morgan Stanley needs to have an ROE of at least 10% to be able to show that it has the capability of earning sufficiently to be able to afford the new capital. That ROE would also show that Morgan Stanley has already survived the overhaul it underwent in the wake of the financial crisis. Since 2006, however, the bank's ROE has been under 10%, the report said.

If Morgan Stanley is unable to go past the 10% mark soon-something that it can do by buying back shares, bolstering profits or both-then investors might demand management to come up with a bolder approach to increase earnings, the report said.

CLSA analyst Mike Mayo echoed to Reuters what he told Morgan Stanley in its annual meeting last year, "They should be generating double-digit ROEs, and if they aren't, what are they going to do about it?" In response to the question, Gorman had said at the meeting that Morgan Stanley would be able to reach this target this year, the report said.

The Federal Reserve had said last week that Morgan Stanley was able to hurdle its yearly stress test, an evaluation required by the Dodd-Frank law to determine how well large lenders would be able to stand against supposed crises, the report said.