Morgan Stanley tops earnings estimates on better-than-expected trading, investment banking results

Morgan Stanley tops earnings estimates on better-than-expected trading, investment banking results

James Gorman, chairman and chief executive officer of Morgan Stanley, speaks during a Bloomberg Television interview in Beijing, China, on Thursday, May 30, 2019.

Giulia Marchi | Bloomberg | Getty Images

Morgan Stanley said Friday that first-quarter profit and revenue beat expectations on stronger-than-expected trading and investment banking results.

The bank posted profit of $4.1 billion, or $2.19 a share, more than double the $1.7 billion earnings of the year-earlier period. The firm said that excluding merger related expenses, adjusted profit was $2.22 a share; analysts had expected $1.70.

 
Expectations for Morgan Stanley are running high after rivals posted strong trading and investment banking results.

The boom in SPAC-issuance has led to a bonanza in fees for equity capital markets desks, and trading desks profited from strong activity across fixed income and stock markets. Furthermore, buoyant stock markets should help Morgan Stanley’s biggest single division, wealth management, as fees are typically a percentage of clients’ assets under management.

CEO James Gorman announced $20 billion in deals last year, marking the most aggressive takeovers since the financial crisis. He spent $13 billion to acquire E-Trade to further his reach with the mass affluent, and $7 billion to buy Eaton Vance to bulk up his investment management business. The Eaton Vance acquisition closed during the first quarter.

Morgan Stanley is the last of the six largest U.S. banks to report first-quarter earnings.

JPMorgan Chase, Bank of America, Wells Fargo and Citigroup all beat analysts’ expectations with help from releasing money set aside earlier for loan losses. Key rival Goldman Sachs beat estimates on strong advisory and trading results.

Here’s what Wall Street expected:

Earnings: $1.70 a share, 68% higher than a year earlier, according to Refinitiv

Revenue: $14.1 billion, 49% higher than a year earlier

Wealth management: $5.97 billion, according to FactSet

Trading: Equities $2.71 billion, Fixed Income $2.11 billion

Investment Banking: $2.13 billion

This story is developing. Please check back for updates.

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