Philippines News: Morgan Stanley outperforms rivals with profit beat

Morgan Stanley, who advised on some of the world's largest mergers in 2021, reports a record net income of $ 15 billion.

Morgan Stanley focused on advising Wealth clients to bear fruit on Wednesday, January 19, with its share rising 3.7%, surpassing market expectations and surpassing its peers in the fourth quarter. Reported revenue.

Investment Bank Wall Street also benefited from a global boom in trading and keeping spending under control during times when rising wages and technology costs were hampering peers.

Full-year profits and earnings were the bank's record of advising on some of the world's largest mergers of the year. Net income increased 37% to $ 15 billion and revenue increased 23% to nearly $ 60 billion.

Bank has also raised its long-term return on equity (ROTCE) target. This is an important indicator of how well a bank spends its shareholders' money to make a profit. We are aiming for an ROTCE of at least 20% from the previous 17%.

“We are raising ROTCE goals to reflect the profitability seen in our business model,” CEO James Gorman told analysts in a conference call.

Since its acquisition over 10 years ago, the 63-year-old CEO has transformed Morgan Stanley from a Wall Street company focused on deficit transactions to a more balanced bank. He was the driving force behind Morgan Stanley's decision to acquire Smith Bernie, and made wealth management the basis of his plans to stabilize earnings.

The combined acquisition of E * Trade and Eaton Vance for $ 20 billion in 2020 doubled that strategy and differentiated Morgan Stanley's focus from its peers. Bank's Wealth Management Division recorded record annual profits, with revenues up 10% to $ 6.25 billion.

Revenue for the quarter ended December 31st exceeded market expectations of $ 1.93 per share, rising to $ 3.59 billion, or $ 2.01 per share.

Morgan Stanley's share price rose 2.5% in the morning trading.

The result ended the mixed earnings season of the country's largest banks, benefiting from a wave of M & A, but dragged by sluggish trading and rising spending. Goldman Sachs, a traditional rival of

Morgan Stanley, reported on Tuesday, January 18, that fourth-quarter earnings were lower than expected and stocks fell by as much as 8%. JPMorgan exceeded earnings expectations last Friday, Friday, January 14, but its share price fell 6% due to cost concerns.

Morgan Stanley, unlike some competitors, has benefited from deploying technology internally through acquisitions rather than building it from scratch, Gorman told analysts.

Gorman also said that salaries are associated with the performance of the wealth management and investment banking sectors.

Compensation costs were almost flat throughout the quarter compared to a year ago.

Healthy Pipeline

Morgan Stanley's investment bank has performed strongly, and Chief Financial Officer Sharon Yesaya said the pipeline remained “healthy” until 2022.

“The CEO's trust remains high and the market remains open and constructive,” she told analysts.

In 2021, Wall Street investment banking giants benefited from a global trading boom. According to Dealogic data, Morgan Stanley advised on 420 transactions last year and was ranked third in the global investment banking rankings.

Total revenue from institutional securities, which house Morgan Stanley's investment banking and trading divisions, fell slightly to $ 6.7 billion, primarily due to sluggish trading.

Revenue from trade fell by 26%. Equity trading revenue increased 13%, but fixed-income trading revenue fell 31% to $ 1.23 billion, clearing profits.