By
Godfrey Benjamin
March 11th, 2024
Morgan Stanley has retained its stance as one of the top banks in the United States with influence spread around the world.
American multinational banking giant Morgan Stanley (NYSE: MS) has released its performance and revenue report for the first quarter of this fiscal year, showcasing a result that is lower than analysts’ expectations. Based on the company’s report, its revenue came in at $14.52 billion as against the $13.92 billion estimate by Refinitiv analysts.
Additionally, the company said its Earnings Per Share (EPS) was pegged at $1.70 as against the Wallet Street expectation of $1.62.
Drawing on the report released, Morgan Stanley notably had it rough in the first quarter despite the Federal Reserve keeping up with its hawkish stance as it concerns interest rate hikes. As the company largely recorded a slump in its revenue, its expenditure for the quarter hit a whole new pedestal.
Morgan Stanley said its expenses on revenue jumped by 4% to $10.52 billion. The company’s expenses soared by virtue of its compensation costs which were beyond expectations. According to an estimate from StreetAccount, Morgan Stanley’s expenses were supposed to be $430 million lower than what was eventually reported.
While the overall outlook of Morgan Stanley was bad, the company still printed significant growth milestones in its core business strengths featuring wealth and investment management.
“The investments we have made in our wealth management business continue to bear fruit as we added a robust $110 billion in net new assets this quarter,” Morgan Stanley CEO James Gorman said in the earnings release. “Equity and fixed Income revenues were strong, although investment banking activity continued to be constrained.”
Gorman has transformed the company and positioned it to be a major leader in the wealth management ecosystem. The latest acquisitions powered by the firm have helped it maintain a good facade as it looks toward upturning its bad fortune across the board.
Morgan Stanley Earnings: Additional Insights
The Wealth Management division recorded a $6.56 billion revenue, up by 11% from the year-ago period. While this figure is in consonance with StreetAccount estimates, the bank notably turned around its fortune in this segment with the interest rate hike being instituted by the Federal Reserve.
Besides wealth management, Morgan Stanley also recorded a significant jump based on the activities of its fixed-income traders. These traders raked in a total of $2.58 billion in revenue, exceeding the $2.33 billion StreetAccount estimate. Equity also recorded a better-than-expected jump with figures coming in at $2.73 billion instead of the $2.65 billion expected.
Morgan Stanley has retained its stance as one of the top banks in the United States with influence spread around the world. Despite the recent regional banking crisis that rocked the financial industry in the First Quarter, Morgan Stanley felt no harm to its business in any small way.
“In my view, we are not in a banking crisis, but we have had and may still have a crisis among some banks,” Gorman said. “I consider the condition not remotely comparable to 2008.”