Morgan Stanley’s traders surpassed expectations in first-quarter revenue, while its wealth management division also regained momentum, marking a significant victory for its new leader, Ted Pick.
Trading revenue soared to $5.33 billion, outpacing analyst predictions, following the stellar performance of Goldman Sachs Group Inc. traders.
Meanwhile, the wealth management unit posted revenue of $6.88 billion, surpassing analysts’ forecasts. Net new assets in the division, a crucial metric for Morgan Stanley, amounted to $95 billion.
This figure not only exceeded the combined total of the previous two quarters but also surpassed the bank’s growth target for the business.
According to Bloomberg News, Pick, who took the helm in January, is confronting the challenge of convincing investors he can advance the growth pace set by his predecessor, revive fortunes at the investment bank he oversaw and accelerate the expansion of its wealth-management behemoth.
While the money-management business has grown steadily, executives are eager to capitalize on a reopening of capital markets that could spell more deals, trades and capital-raising business.
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The bank’s stock
The bank’s stock has been the worst performer among the biggest US banks so far this year after outpacing rivals through much of the previous decade. Earnings for the quarter totaled $3.4 billion on $15.1 billion in revenue.
- “As a result of strong net new asset growth, the firm has reached $7 trillion of client assets across wealth and investment management,” Pick said in a statement.
The bank’s shares were up about 2.7% to $89.35 at 7:52 a.m. in early New York trading. Morgan Stanley’s stock is down 6.7% so far this year, bucking gains across the banking sector especially among its biggest peers.
The stock dived last week after a report in the Wall Street Journal that a cadre of US regulators are scrutinizing the firm’s efforts to prevent potential money laundering by wealthy clients.
Investors have also been analyzing its ability to meet its ambitious target to attract new assets into its wealth unit and deliver promising pre-tax margins of as much as 30%.
Fixed-income trading business
Morgan Stanley’s fixed-income trading business posted $2.49 billion in revenue, compared with estimates of $2.33 billion. In equities, revenue totalled $2.84 billion. In that business, the New York-based firm has lost the crown to Goldman Sachs Group Inc. whose equities haul totalled $3.31 billion in the same period.
Fees from advising on deals came in at $461 million, compared with estimates of $510 million. Equity-underwriting revenue rose to $430 million as the return of public listings and secondary offerings raised banker hopes for a reopening of those markets.
Despite advisory revenue falling behind its chief rivals, Morgan Stanley Chief Financial Officer Sharon Yeshaya pointed to the bank’s prominent standing in recently announced deals.
- “Backlogs are building and we’re seeing sponsor activity pick up,” she said. “We’re in a great position.”
