Morgan Stanley posted fourth-quarter earnings and revenues on Wednesday that exceeded analyst expectations for strong trade, investment banking and asset management results.
The company reported a 51% increase in earnings to $ 3.39 billion, or $ 1.81 per share. Excluding $ 189 million in integration costs related to the E-Trade acquisition last year, earnings were $ 1.92 per share, compared to analysts’ estimate of $ 1.27 surveyed by Refinitiv. Revenue of $ 13.64 billion was more than $ 2 billion higher than the estimate of $ 11.54 billion.
“The company delivered a very strong quarter and full year results, with excellent performances in all three companies and regions,” said CEO James Gorman in the release. “Our unique business model continues to serve us well as we further execute our long-term strategy with the acquisitions of E * TRADE and Eaton Vance.”
The bank’s shares were up 1.9% in premarket trading.
Expectations were high after robust trade and investment banking results at rivals Goldman Sachs and JPMorgan Chase helped boost earnings beats, and Morgan Stanley did not disappoint.
Investment banking generated $ 2.3 billion in revenue, half a billion dollars more than the $ 1.81 billion estimate by analysts polled by FactSet. The results were attributable to equity underwriting income which more than doubled from a year earlier due to a robust IPO and follow-up activity.
Stock trading brought in $ 2.49 billion in revenue, $ 350 million more than the estimate of $ 2.14 billion. Fixed income trading brought in $ 1.66 billion, $ 200 million more than analysts expected.
The asset management division generated $ 5.68 billion in revenue, nearly half a billion dollars more than analysts expected, thanks to higher asset levels and more cost-generating activity, as well as the impact of the E-Trade deal.
Morgan Stanley has the largest asset manager of the six largest US banks, operations that typically benefit from rising markets. That business is supported by the $ 13 billion E-Trade acquisition announced a year ago, and the fourth quarter marks the first period that E-Trade will be integrated into the larger company.
Investment management revenues of $ 1.1 billion exceeded analysts’ estimate of $ 1.02 billion.
Gorman took a bit of a victory lap in his annual update of the company’s strategic goals, explaining that his company was at a tipping point. The next decade will show continued higher levels of revenues and revenues than in previous periods, driven by gains in market share and the acquisitions of Gorman.
The company kept its long-term goals largely unchanged, saying returns on tangible common stocks will be 17% or higher, instead of the 15% to 17% given a year earlier.
“We are in the growth phase of this business for the next decade,” Gorman told analysts after the results were announced.
Morgan Stanley is the last of the major US banks to report fourth-quarter earnings. JPMorgan and Goldman Sachs exceeded analyst expectations for revenue and earnings, aided by trade, while Citigroup, Wells Fargo and Bank of America disappointed with revenue as credit margins were under pressure.
Shares of New York-based Morgan Stanley rose 33% in 2020, surpassing the 4.3% decline of the KBW Bank Index.
Here are the numbers:
- Adjusted earnings of $ 1.92 per share versus $ 1.27 estimate from analysts polled by Refinitiv.
- Sales of $ 13.64 billion versus an estimate of $ 11.54 billion.