Morgan Stanley’s profits rose late last year as it joined other Wall Street banks in benefiting from a recovery in dealmaking and a trading boom around Donald Trump’s victory in the US election.
Morgan Stanley reported fourth-quarter net income of $3.7 billion, up from $1.5 billion a year ago. Revenues were $16.2 billion, up sharply year-on-year from $12.9 billion and setting a record since the 2008 financial crisis.
Morgan Stanley’s chief financial officer Sharon Yeshaya described the bank’s results to the Financial Times as “a really good quarter and a really strong year…the pipelines are the healthiest we’ve seen in a few years”.
Bank of America, which also reported on Thursday, similarly saw a big jump in earnings as its Wall Street operations excelled and beat rivals in loan growth.
Morgan Stanley’s investment banking revenue, which includes fees from underwriting and debt offerings and advising on deal-making, rose 25 percent to $1.6 billion. Equity trading revenue rose 51 percent to $3.3 billion, while securities trading rose 35 percent to $1.9 billion.
The strong performance reflects rivals including BofA, JPMorgan Chase, Goldman Sachs and Citigroup, which all posted significant gains in their markets and investment banking divisions at the end of 2024, SEEbiz reports.
Still, Morgan Stanley’s closely watched asset management business, which has $6.2 trillion in client assets, missed analysts’ expectations for net new assets, drawing inflows of $56.5 billion, up from $47.5 billion a year ago. Analysts polled by Bloomberg had expected $62 billion.
Yeshaya said net flows into asset management were held back by a lack of initial public offerings last year and clients having to spend cash.
But she added that “all the fundamental metrics are really strong in terms of momentum” as the equity underwriting market started to open up again in the last quarter. Analysts generally expect an increase in IPOs this year, as private equity firms look to list their stakes.
Morgan Stanley Chief Executive Ted Pick told analysts Thursday that the bank is “on track” to meet its long-term goal of $10 trillion in assets under management.
Morgan Stanley also reported a 20.2 percent return on tangible common equity — a key profitability metric for banks — in the quarter and 18.8 percent for the year, as it reiterated its long-term target of 20 percent.
After years of focusing its business on asset management, Morgan Stanley is now also emphasizing growing investment banking and trading, Pick said. Morgan Stanley added a new goal for its Institutional Securities Group on Thursday, increasing share of the overall investment banking market.
