Morgan Stanley Posts Fourth-Quarter Earnings Beat

Morgan Stanley posts stronger-than-expected fourth-quarter earnings thanks to a surge in trading, investment banking and wealth management revenue.
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Morgan Stanley  (MS) - Get Report Wednesday posted stronger-than-expected fourth-quarter earnings thanks in part to a surge in trading, investment banking and wealth management revenue.

Morgan Stanley said earnings for the three months ended in December were $3.4 billion, or $1.81 a share, up from $2.2 billion, or $1.30 a share in the same period a year ago and well ahead of the $1.30 a share expected by analysts polled by FactSet. 

Net revenue was $13.6 billion for the fourth quarter ended Dec. 31,  compared with $10.9 billion a year ago. Net interest income rose to $1.2 billion from $1.03 billion, below analysts' forecasts of $1.33 billion.

Full-year net revenue was a record $48.2 billion compared with $41.4 billion a year ago, Morgan Stanley said. Net income applicable to Morgan Stanley for the current year was $11 billion, or $6.46 a share, vs. $9 billion, or $5.19 a share, a year ago.

The firm’s full-year results reflect both record net revenue of $48 billion, up 16% year over year, and net income of $11 billion, up 22%, Morgan Stanley said.

“The firm produced a very strong quarter and record full-year results, with excellent performance across all three businesses and geographies," CEO James Gorman said in a statement, adding that the bank's long-term strategy with the acquisitions of E*Trade and Eaton Vance "serve us well."

Investment banking revenue was up 46% from a year ago, driven by advisory revenuefrom higher M&A completed transactions as well as stronger equity underwriting revenue from IPOs, blocks and follow-on offerings.

Wealth management revenue rose to $5.7 billion from $4.6 billion a year ago, Morgan Stanley said, though the comparisons of current year results to prior periods were impacted by the acquisition of E*Trade. Institutional securities reported net revenue for the quarter was $7 billion compared with $5.1 billion a year ago. 

Investment management revenue, meantime, rang in at $1.1 billion, down from $1.4 billion a year ago, reflecting record asset management fees in both the quarter and full year driven by record assets under management of $781 billion and record long-term net flows of $41 billion, the bank said.

Provision for credit losses on loans and lending commitments, meanwhile, was $5 million for the fourth quarter of 2020, compared with $57 million for the fourth quarter of 2019 and $111 million for the third quarter of 2020. 

The allowance for credit losses on loans and lending commitments was $1.2 billion as of the end of December, a decrease of approximately $29 million from the end of September and an increase of approximately $641 million from a year ago.

Shares of Morgan Stanley were up 0.24% to $75.20 in trading on Wednesday.