Morgan Stanley tops fourth-quarter profits estimates

Morgan Stanley (NYSE: MS) had a boost in share price after it reported fourth-quarter profits that were better than what the company expected. Strong equities trading revenue is mainly what drove these excellent results. 

The net earnings came to $2.01 per share, which was more than the estimated value of $1.91. Morgan Stanley said it had a 9.2% increase in earnings which came to $3.7 billion, representing$2.01 per share. Companywide revenue grew to around $14.52 billion, representing a 6.8% increase. 

Bank operations 

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Unlike most of its rivals, Morgan Stanley kept expenses in check. It recorded compensation expenses of $5.49 billion, which was essentially the same amount they reported in the previous fiscal year. It was also below the estimate of $5.98 billion. This is very different from what Goldman Sachs posted, which was a 31% increase to about $3.25 billion. 

Morgan Stanley shares shot up 3.2s% because of these results. 

The bank said that it had a 13% increase in equities trading revenue which came to $2.86 billion and was approximately $400 million higher than what they recorded in the same quarter of the previous fiscal year. 

The bank claimed that the improvement was because of the increase in prime brokerage revenues accompanied by a strategic investment that brought in $225 million. 

Investment management revenue also topped estimates coming in at $1.75 billion, representing a 5.9% increase. This was initially driven by the bank’s purchase of Eaton Vance. Financial analysts predicted revenue of around $1.66 billion in this segment. 

On the other hand, wealth management revenue came to $6.25 billion, representing a 10% increase. This figure essentially matched the estimate of $6.28 billion. This rise in revenue was driven by growth in the lending sector and rising asset management fees. 

Senior management statements 

Morgan Stanley’s Chief Executive Officer, James Gorman, said:

We have a sustainable business model with scale, capital flexibility, momentum and growth.

The CEO said that the bank’s giant wealth management department, a vital part of the CEO’s strategy, which he grew via several acquisitions, grew client wealth and assets by almost $1 trillion to $4.9 trillion in this fiscal year. In addition, the bank’s equity trading business also holds the No.1 spot in worldwide rankings.