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Jan 17 (Reuters) – Morgan Stanley ( MSN ) reported a smaller-than-expected 41% drop in fourth-quarter profit on Tuesday, as the bank’s business took a hit from market volatility, offsetting slower trading.
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Revenue from Morgan Stanley’s investment banking business fell 49 percent to $1.25 billion in the fourth quarter, reflecting declines in revenue in the bank’s advisory, equity and fixed income divisions.
A slowdown in investment banking business weighed on the company’s net income, which increased 12 percent to $12.7 billion.
“In terms of investment banking, it’s been a tough year for the stock market, so I don’t think anyone expected the industry to post big returns,” said Peter Cardillo, chief market economist at Spartan Capital Securities in New York. .
The business has been a surprisingly bright spot for Morgan Stanley, with the unit’s revenue rising 26% to $3.02 billion in the fourth quarter.
The company’s shares, which have lost 13% in the past year, rose 1.7% to $93.25 in premarket trading.
The bank’s wealth management business, which tends to generate fixed income, saw its interest income rise 6 percent in the quarter last year, largely due to the U.S. Federal Reserve’s interest rate hikes.
Morgan Stanley reports mixed fourth-quarter earnings for major U.S. banks. Its closest rival, Goldman Sachs Group Inc ( GSN ), reported a 69% drop in quarterly profit, a bigger-than-expected fall in its consumer business and lower trading volume.
On an adjusted basis, Morgan Stanley earned $1.31 per diluted share, the bank said.
Profits attributable to the company’s common stockholders for the year ended December 31 were $2.11 billion, or $1.26 per diluted share.
According to Refinitiv, analysts had expected the bank to report earnings of $1.19 per share.
Morgan Stanley raised its provision for credit losses to $87 million in the fourth quarter from $5 million a year earlier amid fears of a worsening recession in the U.S. and worsening consumer credit quality.
Reporting by Manya Sani and Mehnaz Yasmin in Bengaluru and Carolina Mandle and Saeed Azhar in New York; Additional reporting by Amruta Khandekar; Editing by Shounak Dasgupta
Our Standards: The Thomson Reuters Trust Principles.
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