Wealth handling reverses loss at Morgan Stanley to net profit in Q1
Source: Agencies |
April 19, 2013, Friday
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MORGAN Stanley saw a stronger-than-expected first-quarter profit of US$958 million, compared with a year-earlier loss of US$119 million, as its wealth management business grew.
The sixth-largest US bank by assets said yesterday it earned 49 cents per share on a consolidated basis in the first three months of the year, compared with a loss of 6 cents per share a year earlier.
Excluding a charge related to debt value adjustment, or changes in the value of the company's debt, Morgan Stanley earned US$1.2 billion, or 61 cents per share.
On the same basis, analysts had expected earnings of 57 cents, according to Thomson Reuters.
However, revenue from fixed income and commodities trading fell to US$1.5 billion from US$2.6 billion a year earlier, reflecting declines in commodities and rates.
Excluding items, total revenue fell 4.8 percent to US$8.48 billion, beating the average analyst forecast of US$8.35 billion.
Revenue in the wealth management group, which had been expected to drive earnings, rose 5.4 percent to US$3.47 billion, making up about 41 percent of total revenue.
Operating pre-tax profit in the wealth management business was the highest in the bank's history, CEO James Gorman said in a statement.
Gorman has staked the future of the company on this business, arguing that it offers more stable returns that will help offset volatility in the bank's trading and investment banking businesses.
Gorman made good on his promise to deliver a "midteens" pre-tax margin in the business by June - after initially aiming for 20 percent. The unit's profit margin was flat from the fourth quarter at 17 percent, up from 11 percent a year earlier.
Record earnings from wealth management came not just from a pickup in stock and bond market values, but from higher transaction revenue, Chief Financial Officer Ruth Porat said in an interview.
Higher closed-end fund issuance also helped as firms tapped retail investors for new funds in equities and high-yield debt, she said.
Expenses including compensation fell to US$6.54 billion from US$6.72 billion in the year-earlier quarter but were up from US$6.11 billion in the fourth quarter.
The sixth-largest US bank by assets said yesterday it earned 49 cents per share on a consolidated basis in the first three months of the year, compared with a loss of 6 cents per share a year earlier.
Excluding a charge related to debt value adjustment, or changes in the value of the company's debt, Morgan Stanley earned US$1.2 billion, or 61 cents per share.
On the same basis, analysts had expected earnings of 57 cents, according to Thomson Reuters.
However, revenue from fixed income and commodities trading fell to US$1.5 billion from US$2.6 billion a year earlier, reflecting declines in commodities and rates.
Excluding items, total revenue fell 4.8 percent to US$8.48 billion, beating the average analyst forecast of US$8.35 billion.
Revenue in the wealth management group, which had been expected to drive earnings, rose 5.4 percent to US$3.47 billion, making up about 41 percent of total revenue.
Operating pre-tax profit in the wealth management business was the highest in the bank's history, CEO James Gorman said in a statement.
Gorman has staked the future of the company on this business, arguing that it offers more stable returns that will help offset volatility in the bank's trading and investment banking businesses.
Gorman made good on his promise to deliver a "midteens" pre-tax margin in the business by June - after initially aiming for 20 percent. The unit's profit margin was flat from the fourth quarter at 17 percent, up from 11 percent a year earlier.
Record earnings from wealth management came not just from a pickup in stock and bond market values, but from higher transaction revenue, Chief Financial Officer Ruth Porat said in an interview.
Higher closed-end fund issuance also helped as firms tapped retail investors for new funds in equities and high-yield debt, she said.
Expenses including compensation fell to US$6.54 billion from US$6.72 billion in the year-earlier quarter but were up from US$6.11 billion in the fourth quarter.
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