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Morgan Stanley beats estimates on better-than-expected Wall Street and wealth management results
PUBLISHED WED, JAN 20 20216:33 AM ESTUPDATED WED, JAN 20 20218:38 AM EST
Hugh Son
@HUGH_SON
Morgan Stanley reported a 51% increase in profit to $3.39 billion, or $1.81 per share, compared with the $1.27 estimate by Wall Street analysts.
Revenue of $13.64 billion was more than $2 billion beyond the $11.54 billion estimate.
“The firm produced a very strong quarter and record full-year results, with excellent performance across all three businesses and geographies,” CEO James Gorman said.
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Morgan Stanley earnings and revenue beat estimates for Q4
Morgan Stanley on Wednesday posted fourth-quarter profit and revenue that exceeded analysts’ expectations on strong trading, investment banking and wealth management results.
It reported a 51% increase in profit to $3.39 billion, or $1.81 per share, compared with the $1.27 estimate of analysts surveyed by Refinitiv. Revenue of $13.64 billion was more than $2 billion beyond the $11.54 billion estimate.
“The firm produced a very strong quarter and record full-year results, with excellent performance across all three businesses and geographies,” CEO James Gorman said in the release. “Our unique business model continues to serve us well as we further execute on our long-term strategy with the acquisitions of E*TRADE and Eaton Vance.”
Shares of the bank rose1.85% in premarket trading.
Expectations were high after robust trading and investment banking results at rivals Goldman Sachs and JPMorgan Chase helped drive earnings beats, and Morgan Stanley didn’t disappoint.
Investment banking generated $2.3 billion in revenue, half a billion dollars more than the $1.81 billion estimate of analysts surveyed by FactSet. The results were driven by stock underwriting revenue that more than doubled from a year earlier on robust IPO and follow-on activity.
Equities trading produced $2.49 billion in revenue, $350 million more than the $2.14 billion estimate. Fixed income trading produced $1.66 billion, $200 million more than analysts had expected.
The wealth management division produced $5.68 billion in revenue, nearly half a billion dollars more than analysts had anticipated, thanks to higher asset levels and greater fee-generating activity, as well as the impact of the E-Trade deal.
Morgan Stanley has the biggest wealth management business among the six largest U.S. banks, operations that typically benefit from rising markets. That business is being bolstered by the bank’s $13 billion E-Trade acquisition announced a year ago, and the fourth quarter is the first period E-Trade is integrated into the larger enterprise.
Investment management revenue of $1.1 billion edged out analysts’ $1.02 billion estimate.
Morgan Stanley is the last of the big U.S. banks to report fourth-quarter earnings. JPMorgan and Goldman Sachs beat analysts’ expectations for revenue and profit, helped by trading, while Citigroup, Wells Fargo, and Bank of America disappointed on revenue as lending margins were squeezed.
Shares of New York-based Morgan Stanley climbed 33% in 2020, besting the 4.3% decline of the KBW Bank Index.
Here are the numbers:
Profit of $1.81 per share vs $1.27 estimate of analysts surveyed by Refinitiv.
Revenue of $13.64 billion vs $11.54 billion estimate.