MS Morgan Stanley

By Liz Hoffman 

Morgan Stanley said its first-quarter profit fell 9% from a year ago, hit by the same trading slump early in the year that hurt other Wall Street firms.

Morgan Stanley posted a profit of $2.4 billion, or $1.39 a share, on revenue of $10.3 billion. Both are lower than the same period a year ago, when the firm earned $2.7 billion, or $1.45 a share, on record quarterly revenue of $11.1 billion.

All three figures were ahead of estimates from analysts polled by Refinitiv, who had predicted a profit of $1.99 billion, or $1.17 a share, on revenue of $9.93 billion.

Shares rose 2% in premarket trading. They are down 20% from highs last spring.

Morgan Stanley wraps up a big-banks earnings season that investors viewed as mostly underwhelming. Big banks like JPMorgan Chase & Co. and Bank of America Corp. fared better as their giant consumer businesses balanced out slower trading and capital markets.

James Gorman, Morgan Stanley's chief executive since 2010, has rebuilt the firm to be able to do well in all kinds of markets. He doubled down on wealth management, buying Smith Barney, and fired 25% of bond traders and shed risky assets including real estate and oil tankers. Aided by a benign economic backdrop, the effort has mostly worked, producing steady profits and few of the ugly surprises the plagued Morgan Stanley in the past.

That makeover was tested in the first quarter, though.

Stock-trading desks were quieted by calm markets. Revenue in that business, where Morgan Stanley is the largest on Wall Street, fell 21%, in line with declines at rivals JPMorgan and Goldman Sachs Group Inc.

The government shutdown delayed some securities offerings, hitting underwriting fees, which fell 21%. Overall investment-banking revenue, which includes debt and stock issuances and merger advisory fees, fell 24%.

The late-December stock-market swoon shaved tens of billions of dollars of value off the $1.1 trillion in wealth-management portfolios on which Morgan Stanley charges flat fees. Revenue in that business was flat from a year ago at $4.4 billion.

Revenue in asset management, Morgan Stanley's smallest business and one it has been trying to grow, rose 12% to $804 million.

Return on equity, a closely watched measure of profitability, was 13.1%, ahead of Mr. Gorman's medium-term top goal of 13%, though with the help of a lower tax rate.

Write to Liz Hoffman at liz.hoffman@wsj.com

(END) Dow Jones Newswires

April 17, 2019 07:37 ET (11:37 GMT)

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