Reuters | Jan 17, 2019 13:43
By Aparajita Saxena and Elizabeth Dilts
(Reuters) - Morgan Stanley (N:MS) missed analysts' estimates for quarterly profit on Thursday after spikes in volatility in the end of the fourth quarter hurt trading, sending its shares down 5 percent.
The bank was hit by a combination of losses in fixed-income trading and declines in its huge wealth management unit. Larger rivals JPMorgan Chase & Co (N:JPM) and Citigroup Inc (N:C) also reported sharp declines in bond trading revenue.
Morgan Stanley is more reliant on wealth management than other banks, which is supposed to better protect it from market fluctuations. In the latest quarter, however, its wealth management business revenue fell 6 percent, hurt by lower client assets.
"2018 was a great year that finished on a disappointing note" Chief Executive Officer James Gorman said on a post earnings call with analysts. "We do not believe the fourth quarter is the new normal."
The bank's total sales and trading net revenue fell 7 percent to $2.49 billion (£1.9 billion), for the quarter ended Dec. 31, led by a 30 percent decline in fixed income revenue. Equity trading revenue was flat at $1.93 billion.
Morgan's trading are in contrast to that of Goldman Sachs (N:GS) that showed a 2 percent growth in its trading business, led by a 17 percent rise in stocks trading, which dwarfed the losses at its bond trading business.
"After strong results from peers yesterday, Morgan Stanley's quarter appears weak, and we expect shares to underperform," said Brian Kleinhanzl, an analyst at Keefe, Bruyette & Woods.
Morgan Stanley's M&A advisory business was a bright spot, with dealmakers delivering a 41 percent rise in revenue.
Morgan Stanley's net revenue fell 10 percent to $8.55 billion, falling well short of analysts' average expectation of $9.30 billion, according to IBES data from Refinitiv.
Net income applicable to Morgan Stanley more than doubled to $1.53 billion from a year ago when the bank booked a tax-related charge. On a per share basis, it earned 80 cents per share, missing analysts estimate of 89 cents per share. (https://reut.rs/2Rz7rlz)
On an adjusted basis, the bank earned 73 cents per share, compared with 84 cents per share a year ago.
Morgan Stanley's shares fell 4.9 percent to $42.30 in early trading. In the last twelve months, the stock has fallen nearly 22 percent, versus a 12.5 percent decline in the financial index (SPSY) and a 5.6 percent drop in the S&P 500 index (SPX) over the same period.
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
Get free real time quotes, charts and alerts on stocks, indices, currencies, commodities and bonds. Get free top of the line technical analysis/predictors.
More content, faster quotes and charts, and a smoother experience is available only on the App.