Morgan Stanley beats estimates on better-than-expected Wall Street and wealth management results

James Gorman, chairman and chief executive officer of Morgan Stanley, speaks during a Bloomberg Television interview in Beijing, China, on Thursday, May 30, 2019.

Giulia Marchi | Bloomberg | Getty Images

Morgan Stanley on Wednesday posted fourth-quarter profit and revenue that exceeded analysts’ expectations on strong trading, investment banking and wealth management results.

The firm 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 popped 1.75% 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 Stanely 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, 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 firm’s 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.

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’s what Wall Street expected:

Earnings: $1.27 a share, 2.4% lower than a year earlier, according to Refinitiv.

Revenue: $11.5 billion, 6.3% higher than a year earlier.

Wealth management: $5.2 billion, according to FactSet.

Trading: Equities $2.14 billion; fixed income $1.46 billion.

This story is developing. Please check back for updates.

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