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Morgan Stanley MS Q4 2022 earnings beat

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A screen displays the trading information for Morgan Stanley on the ground of the Recent York Stock Exchange (NYSE), January 19, 2022.

Brendan McDermid | Reuters

Morgan Stanley reported fourth-quarter earnings on Tuesday that exceeded Wall Street expectations, boosted by the bank’s record wealth management revenue and growth at its trading business.

Shares of the firm climbed 5.8% Tuesday after the outcomes.

Within the fourth quarter, net income fell to $2.11 billion, or $1.26 per share, from $3.59 billion, or $2.01 per share, a 12 months ago, however it topped an analyst estimate of $1.19 a share from Refinitiv.

Profit has been hurt by a slowdown in deal-making over the past 12 months, prompting the Recent York-based company cut about 2% of its staff in December. The job reductions impacted about 1,600 of its 81,567 employees and touched nearly every corner of the worldwide investment bank. The firm posted severance costs of $133 million in the newest quarter.

Excluding those expenses and a tax gain of $89 million, Morgan Stanley said it earned $1.31 per share.

Revenue fell to $12.75 billion from $14.52 billion a 12 months ago, but was higher than he $12.64 billion Wall Street was expecting, in response to Refinitiv.

“We reported solid fourth quarter results amidst a difficult market environment,” Chairman and CEO James Gorman said in a press release. “Overall, 2022 was a powerful 12 months for the Firm as our clear strategy and balanced business model enabled us to deliver an ROTCE of 16% despite the complex macro backdrop.”

The corporate’s wealth management business, which tends to have regular returns, posted record net revenue of $6.63 billion in the newest quarter, 6% higher than a 12 months ago. The result was helped by a rise in net interest income on higher rates of interest and bank lending growth, the bank said.

Trading revenue also rose, climbing to $3.02 billion from $2.39 billion a 12 months ago.

On the equity side, revenue fell 24% from a 12 months ago, driven by markdowns on certain strategic investments and lower brokerage balances. But fixed income net revenue was up 15% from a 12 months ago, reflecting stronger leads to macro and credit products.

The firm’s investment banking business suffered a giant slowdown amid a collapse in IPOs and debt and equity issuance. Revenue from investment banking got here to $1.25 billion within the fourth quarter, down 49% from a 12 months ago. The bank said the drop was as a consequence of the substantial decline in global equity underwriting volumes and lower accomplished M&A transactions.

Morgan Stanley’s investment management division reported revenue of $1.46 billion, marking a 17% decline from a 12 months ago amid the acute market volatility brought on by the Federal Reserve’s aggressive rate hikes. The bank’s assets under management shrank to $1.30 trillion from $1.57 trillion last 12 months.

In the newest period, the bank put aside $87 million for credit losses, compared with just $5 million in the identical quarter a 12 months ago.

Shares of Morgan Stanley have climbed nearly 8% 12 months thus far following a 13% pullback last 12 months.

Correction: Morgan Stanley’s investment management division reported revenue of $1.46 billion, a 17% decline from a 12 months ago. An earlier version misstated the proportion. Morgan Stanley put aside $87 million for credit losses. An earlier version misstated the figure.

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