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Morgan Stanley reports better than expected revenue in all three main businesses in the quarterly earnings report

Michael Harris
  • January 16th, 14:58
  • Last Updated: January 16th, 14:59
  • Morgan Stanley beats analysts' estimate for profit in the fourth quarter.
  • Morgan Stanley says revenue from all three main businesses remained upbeat in Q4.
  • Morgan Stanley cut 2% of its workforce in December.
  • Morgan Stanley upgraded its target for return on tangible equity (average) to a range of 15%-17%.
  • Morgan Stanley has gained 10% in the stock market in 2019 so far.

Morgan Stanley announced on Thursday that its quarterly profit came out stronger than the analysts’ forecast. The American multinational investment bank further added that its quarterly revenue from all three of the primary businesses beat the estimates.

In the fourth quarter, Morgan Stanley reported $2.24 billion in revenue that marked a 46% hike. According to Refinitiv, analysts were expecting 99 cents of earnings per share for the investment bank in Q4. Thursday’s report, however, printed a much higher $1.30 of earnings per share in the fourth quarter. At $10.86 billion, revenue saw a 27% surge and was reported over $1 billion higher than the experts’ forecast of $9.72 billion.

Morgan Stanley Was Trading 6% Higher In Premarket Trading On Thursday

Following the earnings report and the revised guideline that accentuated added ambition in the financial targets, share prices were seen 6% higher in premarket trading on Thursday. Revenue from bond trading jumped to $5.05 billion with a 32% hike while fixed-income trading posted $1.27 billion in revenue. In the equity trading and investment banking divisions, Morgan Stanley registered $1.92 billion and $1.58 billion in revenues respectively. Revenue from none of the divisions came out worse than expected.

For the wealth management division, the investment bank was expected to note $4.39 billion in revenue. Climbing 11%, the divisional revenue was posted at $4.58 billion in the fourth quarter. In terms of exceeding expectations, investment management, the smallest division of the multinational investment bank, surprised the most. At $1.36 billion in revenue, this division recorded an almost 100% improvement as compared to the last year.

Morgan Stanley Cut 2% Of Its Workforce In December

In wake of the global economic slowdown, Morgan Stanley had cut almost 2% of the workforce in December; a move that affected the bank’s operations and technology units the most, as per the sources.

Following the quarterly performance results, Morgan Stanley upgraded its target for return on tangible equity (average) to a range of 15 to 17 percent. In the last year, the expected return was capped at 14.5%.

Morgan Stanley is in the league of the six largest lenders in the United States, each of which has announced their quarterly earnings report earlier in the week. At the time of writing, Morgan Stanley is exchanging hands at $56 per share in the stock market that marks an around 40% gain for the $91.34 billion company as compared to January 2019. Since the start of the year, the investment bank has already gained over 10% in the stock market in 2020.

About the author

Michael Harris
Michael Harris
I began trading in my early 20's at a local company and since then have combined my knowledge and love of content to become a news writer. I am passionate about bringing insightful articles to readers and hope to add some value to your portfolios!

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