Morgan Stanley Beats Revenue Expectations in Latest Quarter
The financial giant’s latest earnings report has exceeded Wall Street’s expectations, with a strong performance in investment banking. The company reported its fourth-quarter revenue was higher than anticipated, coming in at $12.90 billion compared to the expected $12.75 billion. Despite the positive revenue news, shares of Morgan Stanley initially climbed in premarket trading following the results, but the stock closed Tuesday’s session 4.2% lower.
The positive financial results were driven by a 5% increase in revenue from investment banking, particularly a 25% increase in fixed income underwriting revenue, driven by higher investment-grade issuances. However, the net income dropped by more than 30%, coming in at $1.52 billion, or 85 cents per share, compared to $2.24 billion, or $1.26 per share, a year ago.
The bank’s earnings were also affected by two one-time regulatory charges. These included a $286 million charge tied to a Federal Deposit Insurance Corp. special assessment and a $249 million legal charge to settle a criminal investigation and a related Securities and Exchange Commission probe of unauthorized block trades.
This earnings report also marks the first under the leadership of the new CEO, Ted Pick, who replaced James Gorman as chief executive at the beginning of 2024. Pick, a veteran of Morgan Stanley, who worked his way up the ranks to lead the bank’s Wall Street operations, is optimistic about the future, despite acknowledging two significant downside risks for the bank in 2024.
Pick expressed concerns about the potential impact of intensifying geopolitical conflicts and the state of the U.S. economy, particularly the possibility of a hard landing. While he expects the base economic case to be benign, he warned of the potential for dramatic economic weakening in the coming quarters. Furthermore, he highlighted the inflation and supply chain challenges that could result in a stickier Fed and higher interest rates for a longer period.
On the bright side, wealth management delivered fourth-quarter net revenue of $6.65 billion, slightly edging past the $6.63 billion from the same quarter a year ago. Meanwhile, revenue from investment management was $1.46 billion for the quarter, showing little change from last year.
Despite the strong revenue and growth, shares of the New York-based bank have fallen nearly 8% in 2024 after a 10% gain last year.
Overall, it’s been a mixed bag of results for Morgan Stanley, but the bank remains optimistic about its long-term financial goals. The new CEO, Ted Pick, is focused on delivering value to shareholders and is committed to navigating the potential challenges in the year ahead.
This article was first published on CNBC’s website. If you’d like to stay updated with similar financial stories and reports, don’t miss the latest content available on CNBC PRO.
Source link
