Morgan Stanley beats earnings estimates with better-than-expected commercial and investment banking results

Morgan Stanley reported Friday that first quarter earnings and sales exceeded expectations for more than expected trade and investment banking results.

The bank posted earnings of $ 4.1 billion, or $ 2.19 per share, more than double its earnings of $ 1.7 billion for the same period last year. The company stated that adjusted earnings, excluding merger-related charges, were $ 2.22 per share. Analysts had expected USD 1.70.

Company-wide revenue rose 61% to a record $ 15.7 billion, beating analysts’ estimate by $ 1.6 billion. This was supported by robust revenues from the company’s trading and banking operations on Wall Street. The boom in SPAC issuance has led to an increase in stock market counter fees, and trading counters benefited from strong activity in the bond and stock markets.

Morgan Stanley stock fell 2.4% in early trading.

Morgan Stanley’s Fixed Income Trading Desks posted revenue of $ 2.97 billion, nearly $ 850 million more than analysts’ forecast for the quarter on the back of strong credit trading results. Stock trading generated sales of $ 2.88 billion, or around $ 170 million more than estimated.

Investment banking revenues rose 128% to $ 2.61 billion, beating estimates by nearly $ 500 million.

CEO James Gorman announced deals worth $ 20 billion last year, marking the industry’s most aggressive takeovers since the financial crisis. The bank spent $ 13 billion on acquiring E-Trade to expand its reach with the wealthy and $ 7 billion on buying Eaton Vance to grow its investment management business. The acquisition of Eaton Vance was completed in the first quarter.

The bank announced that wealth management income rose 47% to $ 5.96 billion for the quarter, in line with analysts’ expectations.

Morgan Stanley is the last of the six largest US banks to post profits in the first quarter.

JPMorgan Chase, Bank of America, Wells Fargo and Citigroup all beat analysts’ expectations by releasing money previously earmarked for credit losses. Main competitor Goldman Sachs beat estimates for strong advisory and trading results.

Here are the numbers versus Wall Street expectations:

  • Earnings per share $ 2.19 versus $ 1.70, forecast by analysts surveyed by Refinitiv
  • Revenue: $ 15.7 billion versus $ 14.1 billion expected in the survey

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