Bank powers past revenue estimate by $1 billion
Morgan Stanley’s fourth-quarter revenue beat forecasts by a wide margin, with a boost from its fixed-income underwriting, as the bank’s new chief executive, Ted Pick, took the reins of the storied Wall Street name.
Pick said the bank’s 12.8% return on average tangible equity for 2023 was “solid against a mixed market backdrop and a number of headwinds.”
Morgan Stanley’s stock MS, -4.16% fell 4.2% to close at $85.97 a share, as most financial stocks moved into negative territory on Tuesday.
KBW analyst David Konrad said the bank turned in a quarter with “a lot of noise,” but key items hit his expectations. Morgan Stanley reported hedging losses on its commercial loan book as credit spreads narrowed, he said.
Morgan Stanley’s fourth-quarter profit dropped by 35% and fell short of Wall Street estimates when including one-time items.
Net income applicable to Morgan Stanley common shareholders shrank by about a third to $1.38 billion, or 85 cents a share, from $2.11 billion, or $1.26 a share, in the year-ago quarter.
The latest quarter includes a one-time charge of 28 cents a share related to the bank’s shares of the Federal Deposit Insurance Corp.’s special assessment for last year’s bank failures.
Morgan Stanley fell short of the FactSet consensus estimate of $1.07 a share. Breaking out the one-time charge, earnings would have been $1.13 a share, ahead of the analyst mark.
Revenue grew 1.2% to $12.9 billion, to beat the FactSet consensus of $11.93 billion.
Investment-banking revenue increased 5%, as fixed-income underwriting revenue jumped 25% and advisory and equity underwriting revenue remained flat.
Elsewhere, equity, fixed-income and wealth-management revenue were “essentially unchanged.”
Ted Pick took over from retiring CEO James Gorman at the start of 2024.
Prior to Tuesday’s moves, the stock had climbed 13.9% over the past three months through Friday, while the Financial Select Sector SPDR exchange-traded fund XLF had advanced 12% and the S&P 500 SPX had gained 9.4%.