Morgan Stanley tops analysts’ expectations on better-than-expected trading results

by | Apr 19, 2023 | Financial

Morgan Stanley CEO James Gorman participates in a conversation-style interview with Economic Club of Washington in Washington September 18, 2013.Yuri Gripas | ReutersMorgan Stanley on Wednesday topped estimates for first quarter profit and revenue on better-than-expected trading results.Here’s how the company did:Earnings of $1.70 per share, vs. $1.62 Refinitiv estimateRevenue of $14.52 billion, vs. $13.92 billion estimate.The New York-based bank said earnings fell 19% to $2.98 billion, or $1.70 a share, from a year earlier on declines in investment banking and trading. Companywide revenue slipped 2% to $14.52 billion.As revenues dipped, expenses at the bank climbed 4% to $10.52 billion, mostly fueled by higher-than-expected compensation costs. Expenses came in $430 million higher than the StreetAccount estimate.Higher costs helped hurt profit margins at the bank’s wealth division and investment bank, analyst Mike Mayo of Wells Fargo said in a research note. He also said that when excluding the benefit of a low tax rate, the bank would’ve earned $1.64 per share.Shares of the bank dropped 4.3% in premarket trading. Under CEO James Gorman, Morgan Stanley has become a wealth management giant thanks to a string of acquisitions. The bank gets most of its revenue from wealth and investment management, steadier businesses that help to offset volatile trading and banking results.”The investments we have made in our wealth management business continue to bear fruit as we added a robust $110 billion in net new assets this quarter,” Gorman said in the earnings release. “Equity and fixed Income revenues were strong, although investment banking activity continued to be constrained.”Wealth management revenue climbed 11% from the year-earlier period to $6.56 billion, matching the StreetAccount estimate. The increase was fueled by a rise in net interest income amid higher rates and loan growth, which offset lower asset management revenues as markets declined.First-quarter trading revenue dipped from a year ago as Wall Street comes down from a pandemic-era boom, but Morgan Stanley’s traders managed to top expectations by roughly $250 million. The bank’s fixed income traders produced $2.58 billion in revenue, exceeding the $2.33 billion StreetAccount estimate. Equities trading revenue of $2.73 billion edged out the $2.65 billion estimate.Investment banking revenue dropped 24% …

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