Morgan Stanley Reports Quarterly Results

Morgan Stanley (MS) experienced a more than 3% drop in its shares on Tuesday following the release of its latest quarterly results, despite exceeding revenue expectations. In Q4, the bank reported earnings per share (EPS) of $0.85, with revenue reaching $12.9 billion—surpassing both the $12.7 billion reported a year ago and the consensus estimate of $12.79 billion.

The fourth-quarter pre-tax income for Morgan Stanley included $535 million in charges, with $286 million attributed to an FDIC special assessment and a $249 million legal charge related to a specific matter. For the full year, the bank’s net revenues amounted to $54.1 billion, a slight increase from $53.7 billion the previous year.

Morgan Stanley’s wealth management division posted impressive figures for the full year, generating revenues of $26.3 billion and adding net new assets of $282 billion. Additionally, the investment management division reported full-year revenues of $5.4 billion, with assets under management rising to $1.5 trillion.

Ted Pick, Morgan Stanley’s CEO, commented on the firm’s performance, noting a solid return on tangible common equity (ROTCE) amid a mixed market backdrop and various headwinds in 2023. Looking ahead to 2024, Pick emphasised the bank’s clear and consistent business strategy and a unified leadership team, expressing a focus on achieving long-term financial goals and delivering for shareholders.

While analysts at Goldman Sachs found the results largely in line with expectations, they highlighted lower-than-expected trading revenue, leading to investor concerns. Jefferies analysts, on the other hand, maintained a Buy rating and $107 price target on MS, noting that excluding the legal charge, the bank’s EPS was closer to $0.98 and emphasising positive annualised growth in net new assets. Both sets of analysts outlined areas of investor focus for the future, including trends in Global Wealth Management (GWM), capital markets normalisation, and updated long-term targets.