Morgan Stanley reports higher Q4 profit due to robust equities trading revenue
By Ishika Dangayach on Jan 19, 2022 | 04:39 AM IST
• Profit rises 9.2 % year on year to $3.7 billion or $2.01 per share
• Investment banking revenue increases 6% to $2.43 billion
Morgan Stanley (NYSE: MS) reported higher-than-expected fourth-quarter earnings on Wednesday, thanks to robust equities trading revenue and substantial fees from advising on transactions.
Earnings: $2.01 per share, compared to an estimate of $1.94 per share, according to FactSet
Revenue: $14.52 billion, compared to an expectation of $14.6 billion
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Earnings increased 9.2 % year on year to $3.7 billion, or $2.01 per share, above the $1.94 consensus of analysts. Revenue increased 6.8 percent to $14.52 billion.
“2021 was an outstanding year for our Firm. We delivered record net revenues of $60 billion and a ROTCE of 20%, with stand-out results in each of our business segments,” James P. Gorman, Chairman, and Chief Executive Officer said in a statement. “Wealth Management grew client assets by nearly $1 trillion to $4.9 trillion this year, with $438 billion in net new assets.”
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Morgan Stanley said that equities trading revenue increased 13% year on year to $2.86 billion. Investment management also outperformed expectations, increasing 59 percent to $1.75 billion.
Meanwhile, wealth management income increased 10% to $6.25 billion, almost meeting the $6.28 billion expectation, due to higher asset management fees and more lending to customers.
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Investment banking revenue increased 6% to $2.43 billion, due to greater advisory fees from mergers and acquisitions activity. Fixed-income trading earned $1.23 billion in revenue, a 31% decrease from the previous year.
“Our integrated investment bank has continued to gain wallet share. We have a sustainable business model with scale, capital flexibility, momentum, and growth,” Gorman said.
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Revenue from investment banking increased by 6% in the fourth quarter. Goldman Sachs Group Inc., JPMorgan Chase, and Citigroup Inc. also posted investment banking increases.
Shares of the bank surged 1.48 % to $95.40.