Morgan Stanley Reports Higher Revenue, Earnings -- Update
April 18 2018 - 7:50AM
Dow Jones News
By Liz Hoffman
Morgan Stanley said its first-quarter profit rose 40%, following
other big Wall Street banks that got a boost from lower taxes and
more-active markets.
Morgan Stanley reported Wednesday quarterly profits of $2.58
billion, or $1.45 a share, on revenue of $11.08 billion. Both were
higher than a year ago and surpassed the average analyst estimates
of $1.25 a share in earnings and $10.36 billion in revenue,
according to Thomson Reuters. Per-share earnings of $1.45 is Morgan
Stanley's highest since 2008.
Under Chief Executive James Gorman, Morgan Stanley is in the
late innings of a revamp designed to make its revenue more
predictable and decrease risk. It has doubled down on fee-based
wealth-management services and eased its reliance on trading
commissions and principal investment gains.
The firm in January set out new financial targets, most of which
appear easily in reach, especially given the impact of the tax
cuts.
Shares touched a 10-year high of nearly $59 in mid-March before
sliding amid stock-market turmoil and fears of an escalating trade
war. They remain up 1.5% this year, before Wednesday, and rose 1.8%
in premarket trading following the bank's results.
Quarterly expectations had been relatively high for the quarter,
given improved results at rivals including JPMorgan Chase & Co.
and Goldman Sachs Group Inc., which reported earnings Tuesday. Wall
Street trading desks hummed as markets gyrated, while rising
interest rates boosted the value of everything from adjustable
mortgages to big corporate loans.
The market's wild ride in the first quarter aided Morgan
Stanley's stock-trading, the biggest on Wall Street by annual
revenues. JPMorgan reported a 26% year-over-year increase in
stock-trading revenues, while Citigroup Inc. and Bank of America
Corp. both reported 38% increases.
Morgan Stanley's fixed-income revenue rose 9% to $1.8 billion,
its best quarterly tally in three years. The firm said currencies
and commodities trading were stronger, while loans, bonds and
interest-rate products were weaker, echoing comments by rivals
including Goldman.
Wealth management revenue increased 8% as client assets tailed
off slightly from the fourth quarter, to $2.37 billion. Profit
margins stayed steady at 26% after last year hitting Mr. Gorman's
goal of 25%. They have more than tripled in recent years as the
firm has pushed mortgages and other loans, and ridden a bull market
to higher management fees.
Revenue from advising on corporate mergers rose 16% to $574
million, while underwriting revenue gained 2%. Morgan Stanley
missed the biggest underwriting prizes of the quarter -- that went
to Goldman on Dropbox Inc.'s initial public offering, and Bank of
America on real-estate investment trust Americold -- but it
pocketed more than $9 million for leading the IPO of home-security
firm ADT Inc., according to filings.
Asset management, a small but high-return business, reported an
18% rise in revenue. Mr. Gorman has made growing that unit a
priority.
Write to Liz Hoffman at liz.hoffman@wsj.com
(END) Dow Jones Newswires
April 18, 2018 07:35 ET (11:35 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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