Morgan Stanley on Tuesday, April 16, published data on its earnings for the first quarter of the current year.
The mentioned financial institution’s results for the period from January to March 2024 exceeded preliminary expectations. Analysts’ forecasts for the bank’s profit and revenue turned out to be more pessimistic compared to the final figures. The lender’s result for the first quarter is largely due to the figures of activity in such areas as wealth management, trading, and investment banking.
The profit of the financial institution in the period from January to March 2024 was fixed at $3.41 billion. This indicator exceeded the result for the first three months of last year by 14%. The figures for the past quarter are due to an increase in the efficiency of operations in each of the three main units of the financial institution.
The bank’s earnings per share for the first three months of 2024 amounted to $2.02. It is worth noting that LSEG analysts predicted that this indicator would be fixed at $1.66.
The revenue of the financial institution for the first quarter amounted to $15.14 billion. This indicator showed an increase of 4% compared to the result for the same period last year. LSEG analysts predicted that the financial institution’s revenue for the first quarter would be fixed at $14.41 billion.
After the earnings data were published in the period from January to March 2024, the price of the bank’s shares increased by about 2.5%.
The financial institution’s revenue from wealth management for the first quarter amounted to $6.88 billion. This indicator increased by 4.9% year-on-year. StreetAccount analysts predicted that the bank’s revenue from the mentioned activities for the first quarter would be $230 million less. The final result was determined by the tendency of growth in the markets that became a catalyst for an increase in income fees and a factor that compensated for a drop in interest income.
The bank’s revenue from trading equities for the first quarter showed an increase of 4.1% year-on-year. This figure in monetary terms was fixed at $2.84 billion. StreetAccount analysts predicted that the financial institution’s revenue from trading equities for the first quarter would be $160 million less. In this case, the main factor influencing the final result was an increase in the volume of derivatives trading.
The bank’s revenue from fixed-income trading for the first quarter fell by 3.5% year-on-year. In monetary terms, the corresponding figure amounted to $2.49 billion, exceeding the expectations of StreetAccount analysts by $120 million.
The revenue of the investment unit of a financial institution in the first three months of 2024 amounted to $1.45 billion. This indicator increased by 16% year-on-year. StreetAccount analysts predicted that the revenue of the bank’s investment unit for the first quarter would amount to $ 1.40 billion. The final result exceeded expectations, as the issuance of debt and equities was increased, which offset the decrease in fees from acquisitions.
The smallest unit of a financial institution that specializes in investment management generated revenue of $1.38 billion in the first quarter. This indicator increased by 6.8% year-on-year. At the same time, StreetAccount analysts expected that the revenue of the mentioned unit of the financial institution for the first quarter would amount to $1.43 billion.
The board of the current Morgan Stanley CEO Ted Pick began in difficult circumstances. Against the background of high interest rates, clients of the wealth management unit of the financial institution began to move cash into high-yield securities. Since the beginning of 2024, the price of the bank’s shares has fallen by almost 7%.
At the same time, in the first quarter, Morgan Stanley demonstrated positive results in the areas of trading and investment banking services.
Last week, JPMorgan, Wells Fargo, and Citigroup released earnings data for the period from January to March 2024, which exceeded preliminary expectations.
Information is currently circulating in the media system that several United States regulators are investigating Morgan Stanley for potential shortfalls in the financial institution’s practice of screening clients for the wealth management unit. Commenting on these reports, Ted Pick stated that the bank has long been focused on onboarding and monitoring customer service processes. According to him, the financial institution has been spending time, money, and efforts for several years, continuing these actions now.
Ted Pick also stated that dealmaking is what he called an existential reality for companies that will help Wall Street get on the long-awaited trajectory of investment banking recovery. In this context, pressure on private equity firms was also mentioned, forcing them to sell existing assets and deploy new funds. Separately, Ted Pick drew attention to the need for large companies to overhaul the supply chain as a driving force for the intensification of investment banking activities. According to him, the need for cross-border mergers and acquisitions already exists. He noted that for many companies, the mentioned circumstance has already become a reality. In his opinion, the currently observed geopolitical risks may form an incentive to conclude more deals.
Ted Pick also suggests that some companies will need to shift their international footprint due to supply chain disruptions resulting from armed conflicts. In his opinion, it is necessary to gain financial sponsors to conclude deals, sell private firms, and return money to investors.
During a conversation with investors, the CEO of Morgan Stanley said that the growth of the United States economy during a period of weakening of the respective positions of the European Union and China highlights the fact that people want to get even more exposure to the US.
The CFO of the financial institution Sharon Yeshaya, while speaking with media representatives, stated that surging equity markets and high-profile initial public offerings (IPOs) are factors of fuel more activity.
