Banking, finance, and taxes

Morgan Stanley Ends Strong Year With Rough Quarter

Chris Lange

Published: January 17, 2019 8:50 am

Last Updated: January 31, 2020 1:54 am

Morgan Stanley (NYSE: MS) released its fourth-quarter financial results before the markets opened on Thursday. The investment bank said that it had $0.80 in earnings per share (EPS) and $8.55 billion in revenue. The consensus estimates that were calling for $0.89 in EPS on revenue of $9.29 billion, and the financial giant posted EPS of $0.84 and $9.5 billion in revenue in the same period of last year.

At the end of the most recent quarter, book value and tangible book value per common share were $42.20 and $36.99, respectively. The firm’s Common Equity Tier 1 and Tier 1 risk-based capital ratios under the fully phased-in Standardized Approach were roughly 16.8% and 19.1%, respectively.

The annualized return on average common equity was 7.7%, and the annualized return on average tangible common equity was 8.8%.

In terms of its segments, the company reported as follows:

• Institutional Securities had net revenues of $3.84 billion, a decrease of 15% year over year. These results reflect strong results in investment banking with particular strength in M&A advisory and solid results in equity sales and trading. Lower performance in fixed income sales and trading reflected the market volatility.
• Wealth Management had net revenues of $4.14 billion, a decrease of 6%. Again this decrease was the result of a difficult global environment, seasonality and certain compensation-related items.
• Investment Management had net revenues of $684 million, an increase of 7%. Total assets under management were $463 billion at the end of the quarter, compared with $482 billion a year ago.

James P. Gorman, board chair and chief executive, commented:

In 2018 we achieved record revenues and earnings, and growth across each of our business segments – despite a challenging fourth quarter. We delivered higher annual returns, producing an ROE of 11.8% and ROTCE of 13.5%, as we continued to invest in our businesses. While the global environment remains uncertain, our franchise is strong and we are well positioned to pursue growth opportunities and serve our clients.

Shares of Morgan Stanley closed Wednesday at $44.49, in a 52-week range of $36.74 to $59.38. The consensus analyst price target is $52.50. Following the announcement, the stock was down more than 4% at $42.60 in early trading indications Friday.