Morgan Stanley earnings top estimates fueled by trading revenue gains

Morgan Stanley on Thursday reported first-quarter earnings that surpassed Wall Street expectations, thanks to the bank’s solid revenue gains from trading.

Shares of the New York-based bank jumped more than 2% in premarket trading Thursday. Here’s how the numbers compared with Wall Street expectations:

• Earnings: $2.02 a share, versus $1.68 a share estimate, according to Refinitiv
• Revenue: $14.8 billion, versus $14.2 billion estimate, according to Refinitiv

The bank saw stronger-than-expected revenues from equity and fixed income trading amid volatile markets and higher completed M&A transactions.

Morgan Stanley’s equity trading revenue came in at $3.2 billion, higher than an expectation of $2.7 billion, according to StreetAccount. Fixed income revenue totaled $2.9 billion for the quarter, topping estimate of $2.2 billion from StreetAccount.

“The Firm delivered a strong ROTCE of 20% in the face of market volatility and economic uncertainty, demonstrating the resilience of our global diversified business,” James Gorman, chairman and CEO, said in a statement.

“Institutional Securities navigated volatility on behalf of clients extraordinarily well, Wealth Management’s margin proved resilient and the business added $142 billion net new assets in the quarter, and Investment Management benefited from its diversification,” Gorman said. “The quarter’s results affirm our sustainable business model is well positioned to drive growth over the long term.”

Wall Street banks are grappling with a sudden slowdown in mergers-related advisory fees and a sharp drop in IPO activity in the first quarter, a reversal of the boom that fueled last year’s strong results. The change was triggered by stock market declines and Russia’s invasion of Ukraine, forces that made markets less hospitable for deals and public listings.

The source of the other half of Morgan Stanley’s revenue, the bank’s giant wealth management and investment management divisions, didn’t hold up as well, however.

Its revenue from wealth management totaled $5.9 billion, flat from a year ago but missing an estimate of $6.2 billion, according to StreetAccount.

Morgan Stanley’s investment banking revenue also disappointed, coming in at $1.6 billion, marking a 37% decrease from year ago and lower than a $1.8 billion estimate per StreetAccount. The slowdown was due to a significant decrease in equity underwriting revenues, the bank said.

— CNBC’s Hugh Son contributed reporting.