Qilai Shen | Bloomberg | Getty Images
James Gorman, chief executive officer of Morgan Stanley
Morgan Stanley posted fourth-quarter earnings and revenue on Thursday that beat analyst expectations, excluding a charge related to the tax bill, as strong results in wealth management offset a big drop in fixed income trading revenue.
Here’s how the banking giant fared against analyst estimates:
- EPS: 84 cents per share vs. 77 cents expected by Thomson Reuters
- Revenue: $9.5 billion vs. $9.2 billion expected
- Wealth management: $4.41 billion vs. $4.32 billion expected by StreetAccount
- Fixed income, commodities and currencies trading: $808 million vs. $1.05 billion expected
- Equities trading: $1.9 billion vs. $1.85 billion expected
Wealth management revenue grew by 10.5 percent on a year-over-year basis, helping offset declines in the bank’s trading revenue. Fixed income, commodities and currencies trading revenue decreased by 46 percent. Equities trading revenue fell 5 percent.
The company’s stock rose 1.5 percent in the premarket Thursday. Morgan Stanley shares are up 4.1 percent this year, slightly outperforming the S&P 500, which is up 3.9 percent.
Morgan Stanley’s bottom line excludes a one-time $990 million hit resulting from the recent changes to the U.S. tax code. Its earnings per share totaled 29 cents when including the charge.
President Donald Trump signed a bill last month that slashed the corporate tax rate to 21 percent from 35 percent. The changes are expected to be a long-term positive for companies, but some have taken one-time charges because of them. Some of these companies include Citigroup and Bank of America.
Morgan Stanley’s results come a day after Goldman Sachs — another bank known for its trading business — reported a revenue decline of 50 percent in its fixed income, currencies and commodities trading business.
Goldman said trading is in a “challenging environment characterized by low levels of volatility and low client activity.”