A screen shows trading information for Morgan Stanley on the floor of the New York Stock Exchange (NYSE), January 19, 2022.
Brendan McDermid | Reuters
Morgan Stanley on Thursday reported first-quarter results that beat Wall Street expectations, thanks to the bank’s solid revenue gains from trading.
Shares of the New York-based bank rose more than 2% in premarket trading on Thursday. Here’s how the numbers compare to Wall Street expectations:
- Earnings: $2.02 per share versus $1.68 per share, according to Refinitiv
- Revenue: $14.8 billion versus an estimate of $14.2 billion, according to Refinitiv
The bank posted stronger than expected earnings from trading in equities and fixed income, despite volatile markets and a higher number of completed M&A deals.
Morgan Stanley’s stock trading revenue came in at $3.2 billion, according to StreetAccount, beating expectations of $2.7 billion. Fixed income income for the quarter totaled $2.9 billion, beating StreetAccount’s estimate of $2.2 billion.
“The company has delivered a strong ROTCE of 20% in the face of market volatility and economic uncertainty, demonstrating the resilience of our globally diversified business,” James Gorman, chairman and CEO, said in a statement.
“Institutional Securities weathered the volatility on behalf of clients exceptionally well, Wealth Management’s margin proved resilient and the business added $142 billion in net new money for the quarter, and Investment Management benefited from its diversification,” said Gorman. “The results for the quarter confirm that our sustainable business model is well positioned to drive growth over the long term.”
Wall Street banks are grappling with a sudden drop in merger-related advisory fees and a sharp drop in IPO activity in the first quarter, a reversal of the boom that fueled last year’s strong results. The shift was prompted by stock market declines and Russia’s invasion of Ukraine, forces that made markets less hospitable to transactions and listings.
However, the source of the other half of Morgan Stanley’s revenue, the bank’s giant wealth management and investment management divisions, hasn’t fared so well.
Wealth management revenue totaled $5.9 billion, according to StreetAccount, flat from a year earlier but missing an estimate of $6.2 billion.
Morgan Stanley’s investment banking revenue also disappointed, coming in at $1.6 billion, down 37% year over year and less than an estimate of $1.8 billion per StreetAccount. The slowdown was due to a sharp fall in earnings from equity trading, the bank said.
– CNBC’s Hugh Son contributed to the coverage.