Morgan Stanley tops 4th-quarter earnings expectations as wealth management unit posts record gains

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Morgan Stanley headquarters at Times Square in New York City, July 2021. Gabriel Pevide/Getty Images for Morgan Stanley


© Gabriel Pevide/Getty Images for Morgan Stanley
Morgan Stanley headquarters at Times Square in New York City, July 2021. Gabriel Pevide/Getty Images for Morgan Stanley

  • Morgan Stanley on Tuesday posted fourth-quarter earnings and revenue that came in higher than estimates. a
  • Its wealth management division turned in a 6% rise in revenue, leading to a record annual figure. 
  • It set aside more funds to cover bad loans as bank prepare for potential recession. 

Morgan Stanley on Tuesday posted earnings and revenue that beat  Wall Street’s targets, with strength in its wealth management business helping financial services heavyweight wade choppy market conditions. 

Here are the key numbers:

  • Quarterly revenue: $12.75 billion vs. $12.54 billion projected by analysts polled by FactSet 
  • Diluted earnings per share: $1.26 vs. $1.25 analyst consensus 

Shares were up 2% in premarket trading, to $93.64. The shares year-to-date have risen about 8%. The S&P 500’s Financial sector has gained more than 5% during 2023. 

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The bank’s revenue and per-share earnings results represented year-over-year declines of 14% and 37%, respectively. 

Its wealth management division brought in $6.25 billion in revenue, up 6% from a year ago, leading to a record full-year figure of $24.4 billion. A climb in interest rates and growth in bank lending helped advance net interest income by 11% to $2.32 billion from $2.09 billion a year earlier for the quarter that ended December 31.  Interest rates rose as the Federal Reserve quickly pushed up its benchmark interest rate from 0% to an upper range of 4.5% last year. 

“We reported solid fourth quarter results amidst a difficult market environment,” CEO James Gorman said in the company’s financial report. “Wealth Management provided stability with record revenues and over $310 billion in net new assets, Investment Management benefited from diversification, and within Institutional Securities our Equity and Fixed Income revenues were strong, offset by Investment Banking,” he said. 

Investment banking revenue dropped by 49% to $1.25 billion from $2.85 billion, citing an uncertain macroeconomic environment that was partially offset by its fixed income performance. 

Morgan Stanley’s report follows better-than-expected financial results from rivals JP MorganCitigroup, and Bank of America

A surge in interest rates helped each bank post an increase in net interest income. 

Morgan Stanley and other investment banks also bumped up provisions for loan losses, or funds set aside to cover bad loans, to cushion themselves in the face of a potential recession. Morgan Stanley’s provision for credit loss – or what it reserves to cover bad loans – rose to $87 million from $5 million a year earlier.

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