Morgan Stanley (NYSE: MS) came out with upbeat first-quarter earnings on Tuesday morning, pushing its shares higher. Chief Executive James Gorman said the bank was able to deliver strong financial results despite a slow start to 2019 that followed turbulent markets in the last three months of last year.
Net revenues dropped 7% from the earlier-year quarter while net interest income was up 4%. Shares of the company were up more than 2% in premarket trading session. The stock has gained 18.6% since the beginning of the year through Tuesday. MS stock declined about 28% last year, closing the year trading below book value.
MS Earnings & Outlook
Morgan Stanley reported first quarter earnings of $2.4 billion, or $1.39 per share, down 9% from $2.7 billion, or $1.45 per share in the first quarter of 2018. On average, analysts surveyed by Refinitiv were expecting adjusted earnings of $1.99 billion, or $1.17 per share.
The bank posted revenue of $10.3 billion in the quarter, down from $11.1 billion a year earlier. Analysts had forecast revenue of $9.93 billion, according to figures compiled by Refinitiv.
Morgan Stanley saw revenue in its investment banking segment fall 24% to $1.15 billion. The bank blamed the drop on lower fees from bond and stock underwriting and mergers advice. Underwriting fees were hurt by the recent government shutdown that delayed some securities offerings.
Wealth management unit brought in revenues of $4.39 billion in the quarter, surpassing analysts’ forecasts by nearly $200 million. Investment management, Morgan Stanley’s smallest divisions, generated revenues of $804 million, beating Refinitiv consensus estimate by about $115 million.
Elsewhere, Morgan Stanley posted $2.02 billion in equities trading revenue, which was below expectations. Bond trading revenue was pegged at $1.71 billion, exceeding Wall Street’s estimate by $200 million.
Morgan Stanley CEO Comments
James P. Gorman, Chairman and Chief Executive Officer, said, “We delivered solid earnings despite a slow start to the year following the turbulent markets in the fourth quarter. With an ROE of 13.1% and ROTCE of 14.9%, our results demonstrated the stability and breadth of our global franchise. Even though risks to the global environment remain, markets have recovered and we are well positioned to serve our clients and invest in our businesses.”
Morgan Stanley Profile
Morgan Stanley is a global investment bank whose history, through its legacy firms, can be traced back to 1924. The company has institutional securities, wealth management, and asset management segments, as well as more than 50,000 employees.
Approximately half of the company’s net revenue is from its institutional securities business, with the other half coming from wealth and asset management. The company derives about 30% of its total revenue outside the Americas.