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Morgan Stanley’s fourth-quarter profits jumped by 46 percent from a year earlier, the company said Thursday, helped by a massive boost from the bank’s trading desks.
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The investment bank said it earned a profit of US$2.24 billion, or US$1.30 per share, compared with a profit of US$1.53 billion, or 80 US cents a share, in the same period a year earlier. The results handily beat analysts forecasts of 98 US cents per share.
The financial markets during the last three months of 2019 were good for banks, and Morgan Stanley’s results were no exception. The bank brought in US$2.31 billion in trading revenues, a 33 percent jump from last year. Investment banking revenues were also 14 percent higher in the quarter.
Morgan Stanley is the smallest and last of the big six Wall Street banks to report this week, and its results are similar to what its bigger rivals JPMorgan Chase, Goldman Sachs and Citigroup reported.
All saw big boosts from trading in the quarter, but had issues with lower interest rates.
Since Morgan Stanley has an incredibly small consumer banking franchise — mostly just lending to rich customers using stocks and bonds as collateral — the bank is not as susceptible to interest rate fluctuations as its competitors.
The bank’s return on equity, which is a measurement of bank profitability by measuring how well they perform with the assets they hold, was 13 percent in the fourth quarter compared with 8.8 percent in 2018. Banks like Morgan Stanley aim to have their return on equity above 10 percent.
For the full year, the bank earned a profit of US$9.04 billion on revenues of US$41.42 billion, up from a profit of US$8.75 billion on revenues of US$40.11 billion in 2018.-AP
