Morgan Stanley (NYSE:MS) has reported lower first-quarter revenue and earnings that still beat market expectations as its investment banking division saw less activity in what the bank described in its earnings statement as a volatile trading environment.
Net revenues for the three months to March 31, 2023, declined 2% to $14.5 billion from a year earlier, but were above the $14 billion expected by analysts. Net revenues from its Institutional Securities business fell 11% to $6.8 billion, with advisory revenues decreasing as a result of fewer completed M&A transactions. Wealth Management’s net revenues rose 11% to $6.56 billion and Investment Management saw a 3.5% decline to $1.29 billion.
The bank said equity net revenues declined as a result of lower volumes and declines in global equity markets compared to the first quarter of 2022. Net revenues from Fixed Income were also lower due to declines in commodities and foreign exchange as a result of lower volatility and client activity, it added.
Net income for the quarter came in 19% lower at $2.98 billion for earnings per diluted share of $1.70, a decline of 16%. That beat analysts' forecasts for earnings of $2.8 billion, or $1.63 per share.
“The Firm delivered strong results with a ROTCE (return on average tangible common equity) of 17% in a very unusual environment, demonstrating the strength of our business model,” Morgan Stanley (NYSE:MS) chairman and CEO James Gorman said in a statement.
“The investments we have made in our Wealth Management business continue to bear fruit as we added a robust $110 billion in net new assets this quarter. Equity and Fixed Income revenues were strong, although Investment Banking activity continued to be constrained. We maintained our strong capital levels and remain well positioned to provide long-term value to our shareholders.”
Morgan Stanley's shares traded 3.8% higher at $90.41 in pre-market trading.
Contact the author at stephen.gunnion@proactiveinvestors.com