Profit at Morgan Stanley Surges by 38% Beating Estimates

On Wednesday, Morgan Stanley announced that its profit for the first quarter increased 40%, which followed other big banks on Wall Street that were given a big boost from a more active stock market and lower taxes.

Morgan Stanley posted profits for the quarter of $2.58 billion equal to $1.45 per share and revenue that reached $11.08 billion. Both were above results from one year ago during the same period and surpassed Wall Street expectations of $10.35 billion for revenue and earnings of $1.25 per share.

The $1.45 in per share earnings is the highest for Morgan Stanley since 2008.

Under CEO James Gorman, the bank is nearing the end of its revamp that is designed to makes revenues more predictable while decreasing risk. It doubled down on services of wealth management that are fee based, while easing back the reliance it has on trading commissions as well as principal investment gains.

In January, the company outlined new targets financially of which most appear to be easy to meet, especially thanks to the impact from tax cuts.

Shares reached a high of 10 years in mid-March prior to dropping amidst turmoil in the market and fears of a trade war. However, they are still up over 1.5% for the year and increased another 1.8% in trading on Wednesday before the opening bell following the release of the results by the bank.

Expectations for the quarter were quite high, given the results previously released by its rivals such as Goldman Sachs and JPMorgan Chase.

The wild ride the market took during the first quarter helped stock trading at Morgan Stanley, which is the biggest by annual revenues on Wall Street. JPMorgan posted an increase year over year of 26% for revenue from stock trading, while Bank of America and Citigroup both reported increases of 38%.

Revenue from fixed income at Morgan Stanley increased to $1.8 billion representing an increase of 9%, which was its best three-month period in the last three years.

The company said the commodities and currency trading were both stronger, while interest-rate, bonds and loan products ended weaker which equaled comments made by its rivals.

Revenue from wealth-management increased by 8% as assets of clients tailed off from the 2017 fourth quarter. Profit margins remained steady ending at 26% after hitting the goal set by Gorman of 25% during 2017.

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