A screen displays Morgan Stanley trading information on the floor of the New York Stock Exchange (NYSE), January 19, 2022.
Brendan McDermid | Reuters
Morgan Stanley on Thursday reported first-quarter earnings that beat Wall Street expectations, thanks to strong gains in the bank’s trading revenue.
Shares of the New York-based bank jumped more than 2% in premarket trading on Thursday. Here’s how the numbers compare to Wall Street expectations:
- Earnings: $2.02 per share, vs. $1.68 per share, according to Refinitiv
- Revenue: $14.8 billion, vs. estimated $14.2 billion, according to Refinitiv
The bank recorded higher-than-expected revenue from equity and fixed-income trading amid volatile markets and a higher number of completed M&A transactions.
Morgan Stanley’s stock trading revenue came in at $3.2 billion, beating expectations of $2.7 billion, according to StreetAccount. Fixed income revenue totaled $2.9 billion for the quarter, beating StreetAccount’s estimate of $2.2 billion.
“The company achieved a strong ROTCE of 20% in the face of market volatility and economic uncertainty, demonstrating the resilience of our diverse global business,” James Gorman, chairman and chief executive, said in a statement.
“Institutional Securities managed volatility extraordinarily well on behalf of its clients, Wealth Management’s margin proved resilient and the firm added $142 billion in net new assets during the quarter, and Investment Management benefited of its diversification,” Gorman said. “The results for the quarter confirm that our sustainable business model is well positioned to drive long-term growth.”
Wall Street banks are grappling with a sudden slowdown in merger advisory fees and a sharp drop in IPO activity in the first quarter, a reversal of the boom that fueled strong results for the year last. The change was sparked by falling stock markets and Russia’s invasion of Ukraine, forces that made markets less welcoming for trading and public listings.
The source of the other half of Morgan Stanley’s revenue, the bank’s giant wealth management and investment management divisions, however, did not hold up.
Its revenue from wealth management totaled $5.9 billion, down 37% from a year ago and missing an estimate of $6.2 billion, according to StreetAccount. Morgan Stanley’s investment banking revenue also disappointed, coming in at $1.6 billion versus an estimate of $1.8 billion.
– CNBC’s Hugh Son contributed reporting.