Morgan Stanley Advisory Revenue Nearly Doubled Offsetting Weakness in Underwriting

Morgan Stanley reported better than expected first quarter earnings before the bell Thursday on stronger-than-expected advisory revenue and equity income trading up 10%. $MS release follow major competitor Goldman Sachs and four of the largest U.S. lenders Wells Fargo, Citigroup and PNC reporting mixed results. Morgan Stanley’s wealth management division continues to drive of consistent results,

Morgan Stanley

Morgan Stanley NYSE: MS Reported Before Open Thursday

$2.01 Beat $1.91 EPS AND $14.5 Billion Missed $14.56 Billion Forecast in Revenue

MS Q1 2022 Earnings

  • Morgan Stanley topped analysts’ estimates on both the top and bottom line: It earned $2.02 a share on $14.8 billion in revenue, well ahead of the earnings of $1.75 a share on $14.3 billion in revenue forecast by analysts surveyed by FactSet.
  • Morgan Stanley’s profit of $3.7 billion was down 10% from the year-ago quarter and net revenue was only the “second highest” the bank ever posted.
  • MS’s return on tangible common equity, a measure of profitability, was 19.8%, just below the 21.1% it posted last year.
  • Investment banking revenue was down 37% year over year as both equity and debt underwriting activity severely dried up amid volatile markets.
  • Advisory revenue nearly doubled, offsetting some of the weakness in underwriting, as deals were completed.
  • Fixed income trading was unchanged
  • Equity income trading increased 10% as results this quarter were not hampered by the collapse of family office Archegos Capital Management as they were last year.
  • Revenue in Morgan Stanley’s wealth management division was unchanged from the year-ago quarter.

“The Firm delivered a strong ROTCE of 20% in the face of market volatility and economic uncertainty, demonstrating the resilience of our global diversified business,” CEO James Gorman said in the earnings statement.

The bank rally has been fueled by expectations for the economy reopening and infrastructure spending.  The new surge in home prices has also buoyed optimism for the mortgage business and banks profits thereto.


E Trade and Eaton Vance Aquisition’s

Morgan Stanley’s acquisition of E*TRADE continues reward the banks as the record-setting stock market is drawing in waves of new capital to the online brokerage company. The bank spent $13 billion to acquire E-Trade to further its reach with the mass affluent, and $7 billion to buy Eaton Vance to bulk up its investment management business.

On Feb. 20, 2020, 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 closed in Q4, 2020

Wealth management, which Morgan Stanley expanded through the acquisition of ETrade, increased revenues.

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