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Morgan Stanley tops estimates on underwriting, wealth management

19 January 2018

In the same quarter a year ago, the firm reported $9 billion in revenue.

In line with Wall Street's expectations of a short-term impact from the new tax law, Morgan Stanley also took a net $1.2 billion loss as a result of the law, primarily from deferred tax assets that declined in value. It also beat out Wall Street's earnings per share estimate of 77 cents for the quarter.

Morgan Stanley shares are in the green in pre-trading activity, after the banking giant reported better-than-expected fourth quarter earnings. This is an increase over its earnings per share of 74 cents from the same time a year ago.

Morgan Stanley shares ended the US Wednesday session higher at $55.35. Morgan Stanley recorded a one-time $1.2 billion tax provision, the smallest among the banks.

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Excluding the one-off charge and other items, adjusted profit was $1.68 billion, or 84 cents per share. The financial services company reported net income of $1.67 billion for its fourth quarter of the previous year.

Its longtime bet on the steady-as-she-goes business continues to bear fruit, assisted by a rising stock market that has lifted the value of client assets and respectively, the fees earned by the bank.

Trading revenue, which is traditionally Morgan Stanley's biggest source of income, fell 19.5 percent to $2.25 billion. Investors had attributed a higher value to Goldman for about a decade but a collapse in trading revenue past year has hit the bank harder than its rival.

Beyond wealth management, Morgan Stanley also reached Gorman's annual goals for return on equity and average quarterly bond trading revenue. "In 2017, pre-tax earnings grew by 18%, driven by a 10% increase in revenues, with growth across all our business segments", CEO James Gorman said. Stock trading, where Morgan Stanley is strongest, had steady revenue from a year ago.

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After including adjustments made in connection with the tax reform bill, Morgan Stanley Q4 2017 earnings amounted to 29 cents per share.

S. bank rose almost 2 percent to $56.40 in pre-market trade.

Excluding the tax charge, its return on equity was 9.4 percent previous year.

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Morgan Stanley tops estimates on underwriting, wealth management