In this article, Morgan Stanley exceeded estimates for fourth-quarter earnings and revenue as its equities and fixed income traders performed better than expected. The bank reported that quarterly profit more than doubled to $3.71 billion, or $2.22 per share, compared to the previous year, which had regulatory charges. Revenue increased by 26% to $16.22 billion, with improvements seen across all major business segments.
The firm’s equities trading business stood out in the quarter, with a 51% revenue increase to $3.3 billion, surpassing the StreetAccount estimate by nearly $650 million. Morgan Stanley attributed this success to increased client activity and strength in its prime brokerage business serving hedge funds. Fixed income operations also saw a 35% revenue jump to $1.93 billion, exceeding the StreetAccount estimate by about $250 million, driven by heightened activity in credit and commodities markets.
Investment banking revenue grew by 25% to $1.64 billion, in line with the StreetAccount estimate, due to improved advisory and equity capital markets performance. Wealth management revenue increased by 13% to $7.48 billion, surpassing the estimate by $120 million, driven by higher asset levels and increased fees.
Despite expectations for rising deal activity supporting bank stocks, it was the trading side that notably boosted Morgan Stanley and rival Goldman Sachs in the quarter. Traders at both firms capitalized on increased activity surrounding the U.S. elections in November. Morgan Stanley shares rose by nearly 1.6% in morning trading on Thursday.
On the previous day, JPMorgan Chase, Goldman, and Citigroup also exceeded expectations, benefiting from stronger-than-expected revenue from trading or investment banking.
