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Morgan Stanley reported worse than expected first quarter earnings before the bell Thursday as the economic lockdown hit. Volatility did see fixed-income trading revenue rise 29% and equity trading rise 20%. $MS followed Bank of America $BAC JPMorgan Chase $JPM, Wells Fargo $WFC, PNC Financial $PNC Goldman Sachs and Citigroup $C reporting.

 Morgan Stanley 

Morgan Stanley NYSE: MS Reported Before Open Thursday

 $1.01 Missed $1.07 AND $9.49B Beat $9.08 Billion Forecast in Revenue

Earnings

Morgan Stanley reported first-quarter earnings of $1.01 a share with revenue declining 8% to $9.49 billion. Wall Street expected Morgan Stanley earnings per share to drop 20% to $1.07, according to Zacks. Revenue was seen slipping 12% to $9.08 billion.

Results in the institutional securities division, which includes trading and advisory businesses, were damaged by a $610 million mark-to-market loss on loans held for sale and a $388 million provision for credit losses, potentially tied to the energy sector.

 

Morgan Stanley NYSE: MS

Market Reaction > Pre-market $38.36 USD −0.040 (-0.10%)

Morgan Stanley Earnings Trend Q1 2020

Highlights

“Though we are unable to estimate the extent of the impact, an extended period of depressed economic activity necessitated to combating the disease, and the severity and duration of the related global economic crisis, will adversely impact our future operating results, and the attainment of our financial targets,” the bank warned. It added that the new environment might feature “many of the same negative impacts and without the potential benefit of higher client trading activity experienced in the first quarter.”

  • Fixed-income trading revenue soared 29% to $2.2 billion
  • Equity trading rose 20% to $2.4 billion.
  • Investment banking revenue dipped 1% to $4.9 billion.
  • Revenue wealth management fell 8% to $4.04 billion, this has been an increasingly important growth driver for Morgan Stanley with CEO Gorman's strategy,

“Over the past two months, we have witnessed more market volatility, uncertainty and anxiety as a result of the devastating COVID-19 than at any time since the financial crisis,” Gorman said Thursday in the statement. “While it’s too early to predict how this will unfold, Morgan Stanley navigated the quarter well given the conditions, and our results bear testament to the strength of our balanced business model.”

Morgan Stanley Q1 2020 Earnings

 

On Feb. 20, Morgan Stanley agreed to acquire E-Trade Financial (ETFC) in a $13 billion, all-stock deal. The Wall Street investment bank said the purchase would add E-Trade's consumer-oriented business to its advisor-driven model. The deal is expected to close in Q4.

The volatility, liquidity and rate cuts assisted trading desks as it produced the right type of volatility for the bank, will that continue?. Net interest income has collpased and that is important to them, but not as important as it is to some of the other banks,

 

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