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Morgan Stanley reports 46 per cent profit rise

By Lawrence Gash

Bank's share price surges 6 per cent

The American bank Morgan Stanley (MS) has reported a 46 per cent increase in quarterly profits in the first quarter of the financial year, causing its share price to surge.

Repeated analyst estimates were blown out of the water, with fourth quarter revenues of $10.9bn (£8.35bn, €9.78bn) instead of the expected $9.725bn and net income in the last three months of 2019 of $2.2bn instead of the predicted $1.7bn.

Following such gains along with an annual net income increase of 3 per cent year-on-year to $9bn, the bank’s share price gained 6.14 per cent by mid-afternoon trading to stand at $52.94.

Such strong fourth quarter profits are even more impressive considering that the bank incurred severance costs of $172m towards the end of 2019 when it cut 2 per cent of its workforce citing fears of a global economic slowdown.

In a statement chief executive James Gorman said: “We delivered strong quarterly earnings across all of our businesses ... This consistent performance met all of our stated performance targets.”

In his tenure at the bank Gorman has pushed Morgan Stanley further into wealth management, which has grown significantly as a consequence. Wealth management revenues gained 11 per cent in the fourth quarter of last year, to $4.6bn.

Indeed, the bank’s smallest division, investment management, experienced the highest level of growth throughout the firm. Revenues have increased by almost 100 per cent in the past year with fourth quarter analyst estimates of $773.2m dramatically missing the mark. Instead investment management revenue in Q4 totalled $1.36bn.

The bank’s earnings report concludes a good week for major American financial institutions. Both JPMorgan Chase and Goldman Sachs reported significant gains in fixed income trading and Morgan Stanley continued this trend. The bank’s fixed income trading revenue beat estimates by almost $300m to total $1.27bn.


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