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Morgan Stanley: Earnings Loser (Update 1)

Stocks in this article: BAC MS I:BKX

On an unadjusted basis, Morgan Stanley's securities sales and trading revenue grew to $2.965 billion in the first quarter from $1.667 billion in the fourth quarter and $2.282 billion in the first quarter of 2012. Underwriting revenue totaled $694 million in the first quarter, declining from $772 million the previous quarter and $538 million a year earlier.

Morgan Stanley CEO James Gorman said "in Global Wealth Management, our operating pre-tax profit was the highest in our history, and we look forward to completing the acquisition of the remaining 35% of our wealth management joint venture once we have obtained full regulatory approval." The company has agreed to purchase the remaining 35% stake of the former Morgan Stanley Smith Barney joint venture with Citigroup (C).


The Global Wealth Management unit's revenue increased 4% sequentially and 5% year-over-year, to $3.470 billion in the first quarter.

Atlantic Equities analyst Richard Staite said in a note to clients that Morgan Stanley's first-quarter results were actually "broadly in line" with estimates, since they included a tax benefit of $142 million, or 7 cents a share.

Please see TheStreet's earnings coverage for a full rundown of Morgan Stanley's first quarter, along with analysts' reaction.

Morgan Stanley's shares have returned 6% this year, following a 28% return during 2012. The shares trade for 0.7 times their reported March 31 tangible book value of $27.39, and for 8.0 times the consensus 2014 EPS estimate of $2.54. The consensus 2013 EPS estimate is $2.10.

MS Chart MS data by YCharts

Interested in more on Morgan Stanley? See TheStreet Ratings' report card for this stock.

Bank of America

Shares of Bank of America were down again on Thursday following a 5% decline on Wednesday, after the company announced disappointing first-quarter results.

Bank of America on Wednesday reported a first-quarter profit of $2.6 billion, or 20 cents a share, increasing from $732 million, or 3 cents a share in the fourth quarter, and $653 million, or 3 cents a share, in the first quarter of 2012. The fourth quarter reflected $2.5 billion in costs for independent foreclosure reviews, and $2.7 billion in charges related to the company's mortgage putback settlement of a long-term dispute with Fannie Mae (FNMA).

Bank of America's first-quarter revenue totaled $23.7 billion, increasing from $22.5 billion a year earlier, and coming in ahead of the consensus estimate of $23.41 billion.

The Fannie Mae settlement led to a great reduction in the outstanding mortgage repurchase claims against Bank of America. Investors' mortgage repurchase claims against the company totaled $28.3 billion as of Dec. 31. Bank of Americas fourth-quarter earnings presentation implied that the Fannie Mae settlement would reduce the putback claims by roughly $12.2 billion, leaving about $16.1 billion in claims.

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