Morgan Stanley reported a 62 per cent earnings jump in the final three months of the year, sending profits at the US bank to a record annual high and capping a strong results season across Wall Street driven by a boom in trading and dealmaking.
The US bank, which has been investing heavily in its wealth and investment management divisions in recent years, posted net income of $4.43bn in the fourth quarter, versus $2.73bn a year earlier.
Fourth-quarter earnings per share, at $1.81, were significantly higher than the $1.25 level predicted by analysts in a Bloomberg poll, while revenues also beat expectations to hit $13.6bn. Annual profits came in at $11bn, surpassing the $9bn record set last year.
“The firm produced a very strong quarter and record full-year results, with excellent performance across all three businesses and geographies,” said James Gorman, chief executive.
Morgan Stanley’s investment bank was the standout performer, with sales and trading revenues rising 32 per cent year-on-year. That included a 31 per cent increase in fixed income revenues, far better than the performance of the other big US banks, which was led by a 15 per cent rise at JPMorgan Chase.
But Morgan Stanley’s fourth-quarter increase of 30 per cent in equities trading, where it is the world’s biggest player, was lower than the jumps at Goldman Sachs, Citigroup and JPMorgan Chase.
Morgan Stanley posted the biggest gain in investment banking — the business of advising clients on raising debt, equity and deals — with a 46 per cent rise in fourth-quarter revenues versus a year earlier.
Wealth management, which Morgan Stanley is expanding through the $7bn acquisition of ETrade, increased revenues by 24 per cent year on year, to $5.7bn. That division’s net profits fell 5 per cent year on year, as it absorbed the cost of integrating Eaton Vance.