REUTERS: Morgan Stanley wrapped up the earnings season for big U.S. banks on a resounding note, comfortably beating quarterly profit estimates and raising the possibility that the Wall Street bank could raise its strategic targets.
The bank met most of its key quarterly financial targets set by Chief Executive James Gorman, powered by strength in its bond trading and underwriting businesses.
Morgan Stanley's robust performance in trading mirrored a similarly upbeat showing from bigger rivals Goldman Sachs and JPMorgan , thanks largely to easier comparisons with a year ago when financial markets were roiled by trade and global growth concerns.
Morgan Stanley's revenue from sales and trading rose 28per cent to US$3.19 billion. Bond trading sales more than doubled to US$1.27 billion from a year earlier.
Revenue from investment banking, which includes advising on deals and helping corporations raise money, rose 11.2per cent, buoyed by higher bond and equity underwriting.
"We delivered strong quarterly earnings across all of our businesses ... This consistent performance met all of our stated performance targets," Gorman said in a statement.
Under Gorman, Morgan Stanley has been hitting key financial targets consistently for some time, which suggests he may announce new targets soon, according to analysts.
Morgan Stanley's returns on equity for the full year 2019, fell to 11.7per cent, from 11.8per cent, a year earlier, while return on tangible equity dropped marginally to 13.4per cent.
However, the two profitability measures met the bank's earlier targets for a return on equity of between 10per cent and 13per cent and a return on tangible common equity of between 11.5per cent and 14.5per cent.
For the full year, wealth management reported a pretax profit margin of 27.2per cent, within the firm's target of 26per cent-28per cent pretax profit margin for the year.
In the fourth quarter, the bank was hurt by severance costs of US$172 million related to a 2per cent reduction of its workforce globally due to an uncertain global economic outlook.
Investment management revenue nearly doubled to US$1.36 billion, with overall net revenue rising by 27per cent to US$10.86 billion.
Shares of the bank were up around 2per cent in high volume premarket trade.
The bank said earnings attributable to common shareholders rose to US$2.09 billion, or US$1.30 per share, in the quarter ended Dec. 31, from US$1.36 billion, or 80 cents per share, a year ago. (https://reut.rs/37b9508)
Analysts had expected a profit of 99 cents per share, according to IBES data from Refinitiv.
(Reporting by Abhishek Manikandan in Bengaluru and Elizabeth Dilts in New York; Editing by Saumyadeb Chakrabarty)