MS earnings 4Q 2021

Morgan Stanley on Wednesday posted better-than-expected fourth-quarter earnings on robust equities buying and selling income and because the agency held the road on compensation prices.

Listed here are the numbers:

• Earnings: $2.01 a share vs. estimate $1.91 a share, in line with Refinitiv.
• Income: $14.52 billion vs. estimate $14.6 billion

The financial institution mentioned that earnings rose 9.2% from a 12 months earlier to $3.7 billion, or $2.01 a share, topping the $1.91 estimate of analysts surveyed by Refinitiv. Companywide income rose 6.8% to $14.52 billion, just under the $14.6 billion estimate.

Not like its rivals, which disclosed hovering compensation prices for Wall Road personnel within the quarter, Morgan Stanley stored a lid on bills. The financial institution posted $5.49 billion in compensation bills, primarily unchanged from a 12 months earlier and under the $5.98 billion estimate of analysts surveyed by FactSet. That’s in stark distinction to Goldman Sachs, the place pay prices surged 31% to $3.25 billion.

Shares of the financial institution climbed 1.8% after rising greater than 4% earlier within the session.

In a technique replace, Morgan Stanley boosted its goal for return on tangible frequent fairness to not less than 20% from 17%. It’s a milestone the financial institution has already achieved, reaching 20.2% returns in 2021 excluding merger prices, Barclays analyst Jason Goldberg mentioned in a analysis observe.

Morgan Stanley mentioned that equities buying and selling income within the quarter rose 13% from a 12 months in the past to $2.86 billion, roughly $400 million larger than the $2.44 billion FactSet estimate. The advance was pushed by rising prime brokerage income and a $225 million acquire on a strategic funding.

Funding administration additionally topped estimates, rising 59% to $1.75 billion due to the financial institution’s Eaton Vance acquisition. Analysts had anticipated $1.66 billion.

In the meantime, wealth administration income rose 10% to $6.25 billion, primarily matching the $6.28 billion estimate, on rising asset administration charges and development in lending to purchasers.

Funding banking income rose 6% to $2.43 billion, just below the $2.54 billion estimate, on larger advisory charges from mergers exercise. And stuck revenue buying and selling generated $1.23 billion in income, a 31% decline from a 12 months earlier and under the $1.47 billion estimate.

Throughout a convention name with analysts, CEO James Gorman was requested how for much longer he supposed to remain atop the agency.

“I’m not leaving now, and I’m not going to be right here in 5 years,” he instructed analyst Mike Mayo. “I’ll be right here a number of years and I need to see these integrations achieved. I need to see us firmly on this path and I need to hand it over to any person else who can take us by the following decade.”

Gorman mentioned within the launch that his agency posted document revenues for the complete 12 months 2021, helped by robust outcomes throughout the agency’s main companies. Its big wealth administration division, a key ingredient of Gorman’s technique that was grown by a number of splashy acquisitions, grew consumer belongings by almost $1 trillion within the 12 months to $4.9 trillion, he mentioned.

“We now have a sustainable enterprise mannequin with scale, capital flexibility, momentum and development,” Gorman mentioned.

Buying and selling outcomes throughout Wall Road have begun to return to extra regular volumes after Goldman and JPMorgan Chase posted declines from document ranges a 12 months in the past. Morgan Stanley has the No. 1 ranked equities buying and selling enterprise globally.

Shares of the financial institution have dropped 4.2% this 12 months, underperforming the 8.6% acquire of the KBW Financial institution Index.

JPMorgan and Citigroup every reported the smallest earnings beats within the final seven quarters, and Goldman Sachs missed estimates for fourth quarter revenue due to elevated bills. Wells Fargo had been the only real vibrant spot in financial institution earnings after it gave targets for larger curiosity revenue and decrease bills.