The record stock markets have been good for Morgan Stanley.
The firm's equity management fees climbed to a record in the fourth quarter when the S & P 500 index reached an all-time high. The company exceeded its target cost index for the year and recorded the highest profitability under Executive Director James Gorman, who has set his strategy on acquiring the crisis era of the Smith Barney brokerage from Citigroup Inc. Stocks rose as that the company increased its target of return on capital.
Morgan Stanley has been moving more affluent clients to commission-based accounts that are priced at asset levels rather than activity, which boosts results as markets increase. Income from asset management approached parity with the institutional securities business that at any other point since 2013.
Asset management "has only increased in relevance as it continues to grow," said the CFO Jon Pruzan in an interview. "It's a growing contribution of our profits, which is a good thing given the stability" and the high returns of the business, he said.
Earnings helped counteract the results of the debt trade that were affected by the same malaise that affects everyone on Wall Street. Fixed income revenues for the fourth quarter fell 45 percent to $ 808 million, missing the estimate of $ 1.03 billion from analysts surveyed by Bloomberg. Equity trading income decreased 2 percent to $ 1.92 billion, compared to an estimate of $ 1.89 billion. Morgan Stanley is the leading Wall Street stock store by revenue.
For the year, income from fixed income trading fell 3.7 percent to $ 4.93 billion, which Pruzan called a "solid result" given what he estimated was a decline of approximately 15 percent in the group of general fees.
"We are not reconsidering our strategy" on fixed income, said Pruzan. "For our rate and FX companies, given the volatility, since there were fewer idiosyncratic events this year, it was a really bad backdrop."
Still, there were "encouraging signs" for some commercial companies in the first "The company's shares rose to $ 56.15 at 8:34 a.m. at the start of operations in New York, from $ 55.35 at the close of Wednesday.
Fourth quarter wealth management revenues increased 10 percent to $ 4.41 billion, surpassing the $ 4.22 billion estimate of Jason Goldberg, an analyst at Barclays Plc. Earnings before taxes in the unit set a record for the fourth consecutive quarter.
Morgan Stanley received a charge of $ 990 million in the quarter related to the revision of taxes to the US That was less than the $ 1.25 thousand hit He said that his effective tax rate for this year will be 22 to 25 percent excluding single items, compared to 31 percent in 2017.
Here is a summary of the results of the Morgan Stanley's last quarter:
- Net income fell 59 percent to $ 686 million, or 29 cents per share, from $ 1.67 billion, or 81 cents, a year earlier, the company said on Thursday in a statement. Excluding the tax charge, earnings were 84 cents per share, exceeding the estimate of 77 cents from the 17 analysts surveyed by Bloomberg.
- Annual return on equity, an indicator of profitability, rose to 9.4 percent from 7.9 percent in 2016. Morgan Stanley said its new "medium-term" target for ROE was 10 to 13 percent. Gorman pointed 9% to 11% for 2017.
- Fourth quarter revenues increased 5.3% to $ 9.5 billion, compared to the average estimate of $ 9.24 billion.
– With the assistance of Yalman Onaran