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Profits at Morgan Stanley jumped almost 30 per cent in the first quarter, capping an earnings season for Wall Street’s biggest banks marked by gains from volatile trading around geopolitical tumult.
Morgan Stanley reported better than expected quarterly net income of $5.6bn, up from $4.3bn a year ago.
Gains were driven by the bank’s trading arm. Revenues in equities trading rose 25 per cent to $5.1bn while fixed-income trading revenues increased 29 per cent to $3.4bn, both ahead of analysts’ forecasts.
Rivals JPMorgan Chase, Goldman Sachs, Citigroup and Bank of America also reported strong quarters for trading, though Goldman and BofA fell short of expectations in fixed income.
The first quarter was marked by geopolitical shocks, including the arrest of Venezuelan leader Nicolás Maduro and US-Israeli attacks on Iran, which triggered sharp moves in commodities markets and upended expectations around the future path of interest rates.
While the ensuing increase in oil prices has stoked worries of a possible global recession and triggered losses at many hedge funds, frenzied trading around the events has been good business for Wall Street banks.
At BofA, which also reported earnings on Wednesday, the trading division helped fuel a 7 per cent increase in revenues across the bank to $30.3bn. Profits rose by 17 per cent year-on-year to $8.6bn.
Equities trading revenue at BofA jumped 30 per cent to $2.8bn, but its fixed-income, currencies and commodities traders only posted a 2 per cent increase in revenues to $3.5bn.
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At Morgan Stanley, investment banking fees rose 36 per cent to $2.1bn, slightly ahead of the $2bn analysts were anticipating.
Morgan Stanley’s wealth management business, which generated about 40 per cent of the bank’s earnings last year, attracted net new assets in the first quarter of $118bn, a figure followed closely by investors as a gauge of the business’s growth trajectory.
It is the first time in four years that Morgan Stanley has had back-to-back quarters with at least $100mn in net new assets.
Morgan Stanley shares rose more than 5 per cent on Wednesday, the highest in a year. Shares in BofA were up by 1.5 per cent.
Source:
www.ft.com
