Morgan Stanley Tops Earnings Estimates on Better-Than-Expected Trading, Investment Banking Results

Giulia Marchi | Bloomberg | Getty Images
  • The bank posted first-quarter adjusted profit of $2.22 a share, easily beating projections of $1.70.
  • Companywide revenue surged 61% to a record $15.7 billion, exceeding analysts' estimate by $1.6 billion.

Morgan Stanley reported Friday that first-quarter profit and revenue beat expectations on stronger-than-expected trading and investment banking results.

The bank posted profit of $4.1 billion, or $2.19 a share, more than double the $1.7 billion earnings of the year-earlier period. The firm said that excluding merger related expenses, adjusted profit was $2.22 a share; analysts had expected $1.70.

Companywide revenue surged 61% to a record $15.7 billion, exceeding analysts' estimate by $1.6 billion, helped by robust revenue from the firm's Wall Street trading and banking operations. The boom in SPAC-issuance has led to a bonanza in fees for equity capital markets desks, and trading desks profited from strong activity across fixed income and stock markets.

Morgan Stanley stock fell 2.4% in early trading.

Morgan Stanley's fixed income trading desks produced $2.97 billion in revenue, almost $850 million more than what analysts had expected for the quarter, on strong results in credit trading. Equity trading produced $2.88 billion in revenue, or about $170 million more than the estimate.

Investment banking revenue jumped 128% to $2.61 billion, exceeding estimates by almost $500 million, fueled by what Morgan Stanley said were record equity underwriting revenues.

CEO James Gorman announced $20 billion in deals last year, marking the industry's most aggressive takeovers since the financial crisis. The bank spent $13 billion to acquire E-Trade to further its reach with the mass affluent, and $7 billion to buy Eaton Vance to bulk up its investment management business. The Eaton Vance acquisition closed during the first quarter.

The bank said wealth management revenue in the quarter jumped 47% to $5.96 billion, matching analysts' expectations.

Morgan Stanley is the last of the six largest U.S. banks to report first-quarter earnings.

JPMorgan Chase, Bank of America, Wells Fargo and Citigroup all beat analysts' expectations with help from releasing money set aside earlier for loan losses. Key rival Goldman Sachs beat estimates on strong advisory and trading results.

Here are the numbers vs. what Wall Street expected:

  • Earnings per share $2.19 vs $1.70 projected by analysts surveyed by Refinitiv
  • Revenue: $15.7 billion vs. $14.1 billion expected in the survey

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