By Sonali Basak
(Bloomberg) -- Morgan Stanley’s bond merchants weathered powerful markets with a smaller decline than analysts anticipated, whereas the financial institution additionally eked out a shock leap in wealth-management charges.
Bond-trading income fell 9 p.c, a smaller drop than at rival Goldman Sachs Group Inc. and fewer than the 15 p.c hunch analysts had estimated. Income rose on the agency’s wealth and asset administration items, serving to it counter the most important hunch in investment-banking charges on Wall Avenue.
Morgan Stanley generates almost all its income from charges tied to the markets, a bigger share than rivals similar to JPMorgan Chase & Co. that leaned on their retail-banking items within the first quarter. Buying and selling fell in any respect Wall Avenue corporations as shoppers remained on the sidelines after a tumultuous finish to 2018 and a few new points had been delayed by a U.S. authorities shutdown at the start of the 12 months. Chief Monetary Officer Jonathan Pruzan stated buying and selling and dealmaking is popping round within the early weeks of the second quarter.
Whereas the agency’s revenue fell 9 p.c from a 12 months earlier, Morgan Stanley adopted the sample of each Wall Avenue financial institution in surpassing earnings estimates that had steadily declined over the primary three months of the 12 months.
Morgan Stanley’s bond merchants recovered after a difficult fourth quarter. Equities income, nevertheless, fell wanting expectations. The financial institution has been the No. 1 stock-trading store on Wall Avenue.
The 24 p.c drop in funding banking was led by declines in fairness and debt underwriting. It nonetheless ended final 12 months as the highest banker for preliminary public choices, and has a key position within the listings of firms similar to Uber Applied sciences Inc., which ought to assist assist the division into this 12 months.
Morgan Stanley had a weaker quarter for advisory providers as a result of fewer mergers and acquisitions had been accomplished through the interval, Pruzan stated in an interview.
“M&A is definitely fairly wholesome -- plenty of components are in place to anticipate one other strong 12 months,” he stated, citing a robust pipeline for offers. By comparability, Goldman stated its backlog was lighter. “We gained market share in that enterprise final 12 months. We might anticipate to keep up or develop that market share.”
Morgan Stanley’s wealth-management unit had income of $four.39 billion, up barely from a 12 months earlier, as web curiosity earnings climbed 6 p.c, pushed by progress in financial institution lending and better charges.
The corporate’s shares rose to $48.10 at eight:13 a.m. in early New York buying and selling after closing at $47.02 on Tuesday. They've gained 19 p.c this 12 months, greater than the 15 p.c enhance within the S&P 500 Financials Index.
Different key outcomes:
Internet earnings for the primary quarter fell to $2.43 billion, or $1.33 a share on an adjusted foundation, from $2.67 billion, or $1.45, a 12 months in the past.
Asset-management income rose 12 p.c to $804 million.
Margins on the wealth-management unit had been 27 p.c. The financial institution is focusing on for them to be as excessive as 28 p.c by means of 2019.
In gentle of recent U.S. interest-rate expectations, Pruzan stated Morgan Stanley isn’t altering its outlook for web curiosity earnings and web curiosity margins.
To contact the reporter on this story: Sonali Basak in New York at [email protected] To contact the editors chargeable for this story: Michael J. Moore at [email protected] Daniel Taub
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