September 28, 2023

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

The company reported a 51% increase in earnings to $ 3.39 billion, or $ 1.81 per share. Excluding the $ 189 million integration cost associated with last year’s E-Trade acquisition, earnings per share were $ 1.92, compared to an estimate of $ 1.27 by analysts surveyed by Refinitiv. Revenue of $ 13.64 billion was over $ 2 billion above the estimate of $ 11.54 billion.

“The company had a very strong quarter and record results for the full year with excellent performance in all three businesses and regions,” said CEO James Gorman in the press release. “Our unique business model continues to serve us well as we continue to implement our long-term strategy with the acquisitions of E * TRADE and Eaton Vance.”

Expectations were high after robust trade and investment banking results at rivals Goldman Sachs and JPMorgan Chase helped boost profitability, and Morgan Stanley did not disappoint.

Investment banking had sales of $ 2.3 billion, half a billion dollars more than FactSet’s survey of $ 1.81 billion. The result was due to stocks from the underwriting of stocks, which more than doubled compared to the previous year due to robust IPOs and follow-up activities.

Stock trading generated sales of $ 2.49 billion, $ 350 million more than the estimate of $ 2.14 billion. Fixed income trading grossed $ 1.66 billion, $ 200 million more than analysts expected.

The wealth management division had sales of $ 5.68 billion, nearly $ half a billion more than analysts expected, thanks to higher assets and higher fee-generating activity, as well as the impact of the e-trade deal.

Morgan Stanley has the largest wealth management business of the six largest US banks, which typically benefit from rising markets. That business is backed by the bank’s $ 13 billion acquisition of E-Trade, which was announced a year ago. The fourth quarter is the first period in which E-Trade will be integrated into the larger company.

The bank’s shares were virtually unchanged after premarket trading rose 1.9%.

Gorman drove a small winning lap in his annual update of the company’s strategic goals, setting out the case that his company was at a turning point. In the next ten years, Gorman’s market share gains and acquisitions will sustainably generate higher sales and returns than in previous periods.

The company kept its long-term goals largely unchanged, saying the return on tangible equity will be 17% or more, instead of the 15% to 17% range reported last year.

“We are in the growth phase of this company for the next decade,” Gorman told analysts after the results were released.

Morgan Stanley is the last major US bank to post earnings in the fourth quarter. JPMorgan and Goldman Sachs beat analysts’ expectations for sales and earnings aided by trading, while Citigroup, Wells Fargo and Bank of America were disappointed with sales as credit margins were squeezed.

The shares of New York-based Morgan Stanley rose 33% in 2020, outperforming the KBW Bank Index’s 4.3% decline.

Here are the numbers:

  • Adjusted earnings of $ 1.92 per share versus $ 1.27 estimate by analysts surveyed by Refinitiv.
  • Revenue of $ 13.64 billion versus an estimate of $ 11.54 billion.