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

  • The bank posted first-quarter profit of $4.1 billion, or $2.19 a share. The firm said that excluding merger related expenses, adjusted profit was $2.22 a share; analysts had expected $1.70.
  • Companywide revenue surged 61% to a record $15.7 billion, exceeding analysts' estimate by $1.6 billion.

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.

Companywide revenue surged 61% to a record $15.7 billion, exceeding analysts' estimate by $1.6 billion, helped by robust revenue from the firm's Wall Street trading and banking operations. Expectations were running high after rivals posted outsized 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.

Morgan Stanley's fixed income trading desks produced $2.97 billion in revenue, almost $850 million more than what analysts had expected for the quarter, on strong results in credit trading. Equity trading produced $2.88 billion in revenue, or about $170 million more than the estimate.

Investment banking revenue jumped 128% to $2.61 billion, exceeding estimates by almost $500 million, fueled by what Morgan Stanley said were record equity underwriting revenues.

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.

The bank said that wealth management revenue in the quarter jumped 47% to $5.96 billion, matching analysts' expectations.

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

This story is developing. Please check back for updates.

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