Morgan Stanley Chairman and Chief Govt James Gorman speaks through the Institute of Worldwide Finance Annual Assembly in Washington, October 10, 2014.
Joshua Roberts | Reuters
Morgan Stanley posted third-quarter outcomes Wednesday that topped revenue estimates on better-than-expected buying and selling income.
Here is what the corporate reported:
- Earnings per share: $1.38, vs. $1.28 estimate from LSEG, previously often known as Refinitiv
- Income: $13.27 billion, vs. anticipated $13.23 billion
Revenue fell 9% to $2.41 billion, or $1.38 a share, from a 12 months in the past, the New York-based financial institution mentioned in a assertion. Income grew 2% to $13.27 billion, basically matching expectations.
The financial institution’s shares fell 8%.
Morgan Stanley’s buying and selling operations helped offset income misses elsewhere on the agency. The financial institution’s bond merchants produced $1.95 billion in income, roughly $200 million greater than the StreetAccount estimate, whereas fairness merchants introduced in $2.51 billion in income, $100 million greater than anticipated.
However the financial institution’s all-important wealth administration division generated $6.4 billion in income, beneath the estimate by greater than $200 million, as compensation prices within the division rose. Web curiosity earnings sank 9% from the second quarter and can fall once more within the fourth quarter, the financial institution’s CFO warned.
Funding banking accounted for an additional miss within the quarter, producing $938 million in income, beneath the $1.11 billion estimate, as the corporate cited weak point in mergers and IPO listings. The financial institution’s funding administration division basically met expectations with $1.34 billion in income.
Morgan Stanley shares have been below stress this 12 months.
CEO James Gorman cited a “combined” setting for his companies and acknowledged that the agency’s wealth administration division gathered fewer new property than in current quarters. That is as a result of surging rates of interest have made cash market funds and Treasuries engaging, he instructed analysts Wednesday. The wealth administration enterprise was nonetheless monitoring to hit his three-year aim of producing $1 trillion in new property, he added.
“When folks have a selection of creating a 4%, 5% return by doing nothing, they don’t seem to be going to be buying and selling within the markets,” Gorman mentioned.
‘Clear slate’
Led by Gorman since 2010, Morgan Stanley has managed to keep away from the turbulence afflicting some rivals currently. Whereas Goldman Sachs was pressured to pivot after a foray into retail banking and as Citigroup struggles to carry its inventory value, the primary query at Morgan Stanley is about an orderly CEO succession.
In Could, Gorman introduced his plan to resign inside a 12 months, capping a profitable tenure marked by large acquisitions in wealth and asset administration. Morgan Stanley’s board has narrowed the seek for his successor to a few inner executives, he mentioned on the time.
Gorman reiterated his want at hand over the CEO place to a successor inside months.
“This agency is in glorious form however the geopolitical and market turmoil that we discover ourselves in,” Gorman mentioned. “My hope and expectation is at hand over Morgan Stanley with as clear a slate as attainable and cope with a couple of of our excellent points within the subsequent couple of months.”
Final week, JPMorgan Chase, Wells Fargo and Citigroup every topped expectations for third-quarter revenue, helped by low credit score prices. Goldman Sachs and Financial institution of America additionally beat estimates on stronger-than-expected bond buying and selling outcomes.
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Correction: Morgan Stanley’s revenue fell 9% to $2.41 billion, or $1.38 a share, from a 12 months in the past. An earlier model misstated a determine.
