Morgan Stanley (MS) This fall 2020 earnings beat estimates

Morgan Stanley On Wednesday, fourth quarter earnings and sales exceeded analysts’ expectations for strong trading, investment banking and wealth management results.

The company reported a 51% increase in earnings to $ 3.39 billion, or $ 1.81 per share. Excluding the $ 189 million integration cost associated with last year’s E-Trade acquisition, earnings per share were $ 1.92, compared to an estimate of $ 1.27 by analysts surveyed by Refinitiv. Revenue of $ 13.64 billion was over $ 2 billion above the estimate of $ 11.54 billion.

“The company had a very strong quarter and record results for the full year with excellent performance in all three businesses and regions,” said CEO James Gorman in the press release. “Our unique business model continues to serve us well as we continue to implement our long-term strategy with the acquisitions of E * TRADE and Eaton Vance.”

Expectations were high for robust trade and investment banking results from competitors Goldman Sachs and JPMorgan Chase helped increase winning strokes and Morgan Stanley did not disappoint.

Investment banking had sales of $ 2.3 billion, half a billion dollars more than FactSet’s survey of $ 1.81 billion. The result was due to stocks from the underwriting of stocks, which more than doubled compared to the previous year due to robust IPOs and follow-up activities.

Stock trading generated sales of $ 2.49 billion, $ 350 million more than the estimate of $ 2.14 billion. Fixed income trading grossed $ 1.66 billion, $ 200 million more than analysts expected.

The wealth management division had sales of $ 5.68 billion, nearly $ half a billion more than analysts expected, thanks to higher assets and higher fee-generating activity, as well as the impact of the e-trade deal.

Morgan Stanley has the largest wealth management business of the six largest US banks, which typically benefit from rising markets. This business is supported by the bank $ 13 billion The acquisition of E-Trade announced a year ago and the fourth quarter is the first period in which E-Trade will be integrated into the larger company.

The bank’s shares were virtually unchanged after premarket trading rose 1.9%.

Gorman drove a small winning lap in his annual update on the company’s strategic objectives, highlighting the case that its business is at a turning point. In the next ten years, Gorman’s market share gains and acquisitions will sustainably generate higher sales and returns than in previous periods.

The company kept its long-term goals largely unchanged, saying that the return on tangible equity will be 17% or more, rather than the 15% to 17% range per year earlier.

“We are in the growth phase of this company for the next decade,” Gorman told analysts after the results were released.

Morgan Stanley is the last major US bank to post earnings in the fourth quarter. JPMorgan and Goldman Sachs exceeded analysts’ expectations for sales and earnings, aided by trading, while Citigroup, Wells Fargoand Bank of America disappointed revenue as credit margins tightened.

The shares of New York-based Morgan Stanley rose 33% in 2020, outperforming the KBW Bank Index’s 4.3% decline.

Here are the numbers:

  • Adjusted earnings of $ 1.92 per share versus $ 1.27 estimate by analysts surveyed by Refinitiv.
  • Revenue of $ 13.64 billion versus an estimate of $ 11.54 billion.

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