Morgan Stanley Surpasses Estimates with Robust Equities and Fixed Income Trading Performance

Morgan Stanley exceeded fourth-quarter earnings and revenue expectations, driven by outstanding performance in its equities and fixed income trading divisions. The bank reported earnings of $2.22 per share, surpassing the $1.70 estimate from LSEG, and revenue of $16.22 billion, beating the $15.03 billion forecast. Quarterly profit more than doubled to $3.71 billion, or $2.22 per share, compared to the same period last year, which included regulatory charges.

Revenue grew 26% year-over-year, reflecting improvements across all major business segments. Equities trading led the surge with a 51% increase in revenue to $3.3 billion, exceeding estimates by nearly $650 million, fueled by higher client activity and robust performance in its prime brokerage services for hedge funds. Fixed income operations posted a 35% revenue increase to $1.93 billion, approximately $250 million above projections, driven by heightened activity in credit and commodities markets.

Investment banking revenue climbed 25% to $1.64 billion, in line with expectations, supported by gains in advisory and equity capital markets. Wealth management also performed strongly, with revenue up 13% to $7.48 billion, surpassing estimates by $120 million, due to rising asset levels and higher fees.

Despite optimism about potential increases in deal activity supporting bank stocks, Morgan Stanley's exceptional trading performance stood out. Elevated trading volumes surrounding the U.S. elections in November bolstered results, benefiting both Morgan Stanley and its rival, Goldman Sachs. Morgan Stanley shares rose 2% in premarket trading following the announcement.

On Wednesday, JPMorgan Chase, Goldman Sachs, and Citigroup also reported earnings that exceeded expectations, driven by strong trading and investment banking revenue.