Yahoo Finance Morgan Stanley (MS) Q1 Earnings Top on Revival of IB Business
Morgan Stanley’s MS first-quarter 2024 earnings of $2.02 per share handily surpassed the Zacks Consensus Estimate of $1.69. The figure also compared favorably with $1.70 per share reported in the prior-year quarter.
Additionally, MS’ net revenues of $15.14 billion beat the Zacks Consensus Estimate of $14.47 billion. The top line grew 4% year over year.
The primary reason for Morgan Stanley’s better-than-expected performance was the resurgence of the investment banking (IB) business. Since 2022, the performance of the IB business has been subdued because of a host of factors, including high inflation, central banks’ monetary tightening policy and geopolitical tension, among others.
These factors kept the clients on the sidelines, and hence, global deal-making and underwriting activities almost crashed. Nonetheless, since mid-2023, some green shoots were visible in the IB business, with a proper rebound occurring in the first quarter of 2023. Morgan Stanley’s quarterly performance immensely benefited from this revival.
Morgan Stanley Price, Consensus and EPS Surprise
Morgan Stanley price-consensus-eps-surprise-chart | Morgan Stanley Quote
IB Majorly Supports Revenues
Morgan Stanley’s Institutional Securities (IS) segment, which mainly runs its capital markets operations, posted decent top-line performance in the first quarter. The segment’s revenues grew 3% year over year to $7.02 billion, driven by increased underwriting revenues and equity trading revenues.
Specifically, the company’s equity underwriting income jumped 113% and fixed income underwriting income was up 37%. On the other hand, advisory business was still a weak point for Morgan Stanley, with advisory revenues declining 28%. Thus, total IB fees (in the IS segment) grew 16% to $1.45 billion.
Likewise, JPMorgan JPM witnessed a decline in advisory fees while underwriting business performance improved. The company’s equity underwriting fees jumped 51% and debt underwriting fees were up 58%. On the other hand, advisory fees fell 21%. Overall, total IB fees grew 21% from the prior-year quarter to $2 billion.
In contrast, Goldman GS posted a solid improvement in advisory fees. The metric was up 24% year over year in the first quarter. Further, both debt and equity underwriting fees were up 38% and 45%, respectively. Its IB fees jumped 32% to $2.08 billion.
Morgan Stanley also posted a decent trading performance. Equity trading revenues increased 4% year over year, while fixed-income (FICC) trading income declined 4%.
Similar to MS, JPMorgan witnessed lower FICC markets revenues, while equity markets revenues remained stable. Here GS also bucked the trend, and both FICC and equity revenues grew 10% each in the first quarter.
Additionally, the performance of Morgan Stanley’s Wealth Management and Investment Management segments was decent in the first quarter. The company witnessed a 21% year-over-year rise in total client assets and a 10% increase in total assets under management or supervision.
Thus, the company’s fee income grew 10% to $13.34 billion. On the other hand, Morgan Stanley’s net interest income declined 23% because of higher interest expenses.
Further, non-interest expenses for this Zacks Rank #3 (Hold) company increased during the quarter. The metric was $10.74 billion, up 2% from the prior-year quarter. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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