Morgan Stanley exceeds forecasts with 46% jump in fourth-quarter profits

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Brian Adam
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Morgan Stanley’s fourth-quarter profits jumped 46% from a year earlier, the company said on Thursday, helped by a massive boost from the bank’s trading desks.

The investment bank said it earned a profit of 2.24 billion US dollars, or 1.30 dollars per share, compared with a profit of 1.53 billion dollars, or 80 cents a share, in the same period a year earlier.

The results easily beat analysts’ forecasts of 98 cents per share.

The financial markets during the last three months of 2019 were good for banks, and Morgan Stanley’s results were no exception.

The bank brought in 2.31 billion dollars in trading revenues, a 33% jump from last year.

Investment banking revenues were also 14% higher in the quarter.

Morgan Stanley is the smallest and last of the big six Wall Street banks to report this week, and its results are similar to what its bigger rivals JPMorgan Chase, Goldman Sachs and Citigroup reported.

<figcaption class='imgFCap'>General view of Morgan Stanley’s UK headquarters (Matt Crossick/PA)</figcaption>
General view of Morgan Stanley’s UK headquarters (Matt Crossick/PA)

All saw big boosts from trading in the quarter, but had issues with lower interest rates.

Since Morgan Stanley has an incredibly small consumer banking franchise, mostly just lending to rich customers using stocks and bonds as collateral, the bank is not as susceptible to interest rate fluctuations as its competitors.

The bank’s return on equity, which is a measurement of bank profitability by measuring how well they perform with the assets they hold, was 13% in the fourth quarter compared with 8.8% in 2018.

Banks like Morgan Stanley aim to have their return on equity above 10%.

For the full year, the bank earned a profit of 9.04 billion US dollars on revenues of 41.42 billion US dollars, up from a profit of 8.75 billion US dollars on revenues of 40.11 billion US dollars in 2018.

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