A display shows the buying and selling data for Morgan Stanley on the ground of the New York Inventory Trade (NYSE), January 19, 2022.
Brendan McDermid | Reuters
Morgan Stanley reported fourth-quarter earnings on Tuesday that exceeded Wall Road expectations, boosted by the financial institution’s report wealth administration income and progress at its buying and selling enterprise.
Shares of the agency rose greater than 2% in premarket buying and selling following the outcomes.
Within the fourth quarter, web earnings fell to $2.11 billion, or $1.26 per share, from $3.59 billion, or $2.01 per share, a 12 months in the past, but it surely topped a Refinitiv estimate of $1.19 a share.
Income have been harm by a slowdown in dealmaking over the previous 12 months, prompting the New York-based agency lower about 2% of its employees in December. The job cuts impacted about 1,600 of its 81,567 workers and touched almost each nook of the worldwide funding financial institution. The agency posted severance prices of $133 million within the newest interval.
Excluding these prices and a tax achieve of $89 million, Morgan Stanley stated it earned $1.31 per share.
Income for the quarter totaled $12.75 billion, greater than the $12.64 billion Wall Road was anticipating, in keeping with Refinitiv.
“We reported strong fourth quarter outcomes amidst a troublesome market atmosphere,” Chairman and CEO James Gorman stated in a press release. “General, 2022 was a powerful 12 months for the Agency as our clear technique and balanced enterprise mannequin enabled us to ship an ROTCE of 16% regardless of the complicated macro backdrop.”
The corporate’s wealth administration enterprise, which tends to have regular returns, posted report web income of $6.63 billion within the newest quarter, 6% greater than a 12 months in the past. The outcome was helped by a rise in web curiosity earnings on greater rates of interest and financial institution lending progress, the financial institution stated.
Buying and selling income additionally rose, climbing to $3.02 billion from $2.39 billion a 12 months in the past.
On the fairness aspect, income fell 24% from a 12 months in the past, pushed by markdowns on sure strategic investments. However fastened earnings web income was up 15% from a 12 months in the past, reflecting stronger leads to macro and credit score merchandise.
The agency’s funding banking suffered an enormous slowdown amid a collapse in IPOs and debt and fairness issuance. Income from funding banking got here to $1.25 billion within the fourth quarter, down 49% from a 12 months in the past. The financial institution stated the drop was because of the substantial decline in world fairness underwriting volumes and decrease accomplished M&A transactions.
Morgan Stanley’s funding administration division reported income of $1.46 billion, marking a 15% decline from a 12 months in the past amid the intense market volatility introduced on by the Federal Reserve’s aggressive fee hikes. The financial institution’s belongings below administration shrank to $1.30 trillion from $1.57 trillion final 12 months.
Within the newest interval, the financial institution put aside $85 million for credit score losses, in contrast with simply $5 million in the identical quarter a 12 months in the past.
Shares of Morgan Stanley have climbed almost 8% 12 months up to now following a 13% pullback final 12 months.