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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.
“Wealth management was not decent, it was great,” CFO Jonathan Pruzan told CNBC. We feel “very good about momentum in the business. Flows are great.”
The company’s stock rose 1.4 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.”
—CNBC’s Wilfred Frost contributed to this report.