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Morgan Stanley’s profits shot higher at the end of last year, as it joined other Wall Street banks in benefiting from a recovery in dealmaking and booming trading around Donald Trump’s victory in the US election.
Morgan Stanley reported fourth-quarter net income of $3.7bn, up from $1.5bn one year ago. Revenues were $16.2bn sharply higher year on year from $12.9bn and set a post-2008 financial crisis record.
Morgan Stanley chief financial officer Sharon Yeshaya described the bank’s results to the Financial Times as “a really strong quarter and a really strong year . . . the pipelines are the healthiest we have seen in several years”.
Bank of America, which also reported on Thursday, similarly recorded a big bump in earnings, as its Wall Street businesses excelled and it beat competitors on loan growth.
Morgan Stanley’s investment banking revenues, which include fees from underwriting stock and debt offerings and advising on dealmaking, rose 25 per cent to $1.6bn. Equities trading revenues rose 51 per cent to $3.3bn, while fixed-income trading was up 35 per cent at $1.9bn.
The robust performance echoes rivals including BofA, JPMorgan Chase, Goldman Sachs and Citigroup, which all notched-up significant gains in their markets and investment banking divisions at the end of 2024.
Still, Morgan Stanley’s closely watched wealth management business, which has $6.2tn in client assets, missed analyst expectations for net new assets, attracting inflows of $56.5bn, up from $47.5bn one year ago. Analysts polled by Bloomberg had expected $62bn.
Yeshaya said net flows to wealth management had been held back by a lack of initial public offerings last year and clients needing to spend cash.
But she added that “all of the underlying metrics are really strong in terms of momentum” because the equity underwriting market started to reopen in the last quarter. Analysts are broadly forecasting a rise in IPOs this year, as private equity companies look to list their holdings.
Morgan Stanley chief executive Ted Pick told analysts on Thursday that the bank was “on track” to meet a long-term goal of $10tn in wealth management assets.
Morgan Stanley also reported a 20.2 per cent return on tangible common equity — a key profitability metric for banks — in the quarter and 18.8 per cent for the year as it reiterated a long-term goal of 20 per cent.
After years of centring its business on wealth management, Morgan Stanley was now also putting an emphasis on growing investment banking and trading, Pick said. Morgan Stanley on Thursday added a new target, for its Institutional Securities Group, of growing its share of the total investment banking market.
“We are serious about bringing ISG to the fore,” Pick said, adding that the group opted not to set a numerical target because “we want those share gains to be durable” and not reached by taking unnecessary risks.
He also noted that the bank was seeing “the best backlog in 10 years” in dealmaking: “The pent-up activity we have seen is starting to release.”
The New York-based bank’s shares rose about 2 per cent on Thursday after rallying almost 5 per cent on Wednesday when several of its competitors reported strong results.
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