Published: Thu, January 18, 2018
Money | By Armando Alvarado

Morgan Stanley shares poised to open higher after earnings beat forecasts

Morgan Stanley shares poised to open higher after earnings beat forecasts

Analysts had been expecting Morgan Stanley to produce adjusted earnings of $0.77 a share. The global bank's Q4 trading revenues were $2.25 billion, a 19.5% drop from a year earlier.

Morgan Stanley's X-Factor, though, is increasingly its giant retail brokerage, which oversees $2.4 trillion for some 3.5 million American households. The firm had net revenue in the quarter of $9.5 billion, up from $9.02 billion in the same period a year ago. Morgan Stanley reports earnings, Thursday, Jan. 18, 2018. Underwriting revenue rose 42 percent to $915 million, while revenue from other parts of the institutional securities unit declined.

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James Gorman's bank reported its best-ever quarter for its core business, wealth management, buoyed by a huge client base investing in stock markets that just doesn't seem to ever go down. Stock trading, where Morgan Stanley is strongest, had steady revenue from a year ago.

For the full year, Morgan Stanley had a profit of $7.08 billion, excluding the tax impact, or $3.60 a share. That's close to the 10 percent goal that the bank's management had set.

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In fixed-income trading, a former problem division that Morgan Stanley sharply cut two years ago in an effort to improve profitability and focus, revenue was down 45%, failing for the first time in almost two years to clear a $1 billion bar set by Chief Executive James Gorman.

In an interview, Chief Financial Officer Jonathan Pruzan called the fourth-quarter results "strong", despite ongoing issues with trading.

Gorman had set an ROE target of 9 percent to 11 percent past year. Analysts were looking for $9.20 billion.

Morgan Stanley is also working to keep its efficiency ratio, which measures expenses relative to revenue, to less than 73 percent, down one percentage point from its prior target.

Goldman Sachs and Morgan Stanley are the two largest investment banks on Wall Street and employ thousands of people in London.

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