Morgan Stanley's Wealth Revenue Tops Estimates

The bank’s shares were up about 2.7% to $89.30 at 2:33 p.m. in New York trading. Morgan Stanley’s stock is down 4.9% so far this year, bucking gains across the banking sector especially among its biggest peers.

The stock took a dive last week after a report in the Wall Street Journal that a cadre of U.S. 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%.

Pick addressed that matter on the call as he spoke about the bank’s work tied to client monitoring. “This is not a new matter. We’ve been focused on our client onboarding and monitoring processes for a good while,” he said. “We have ongoing communications with our regulators, as all the large banks do.”

“This is about processes,” Pick said. “We have been spending time, effort and money for multiple years and it is ongoing. We’ve been on it. And the costs associated with this are largely in the expense run rate.”

Morgan Stanley’s fixed-income trading business posted $2.49 billion in revenue, compared with estimates of $2.33 billion. In equities, revenue totaled $2.84 billion. In that business, the New York-based firm has lost the crown to Goldman Sachs Group Inc. whose equities haul totaled $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.”

Credit: Bloomberg