Morgan Stanley profit soars, closing out a banner year

CEO James Gorman has taken Morgan Stanley from a chronic earnings-day wild-card to a steadier performer

Morgan Stanley’s fourth-quarter profit rose 46 percent from a year ago, capping off the bank’s best year on record.

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The firm’s profit of $2.2 billion, or $1.30 a share, on $10.9 billion in revenue, topped expectations of analysts polled by FactSet, who had forecast earnings of $1.02 a share on $9.71 billion of revenue.

For the full year, revenue and profit both ticked up 3 percent.

Morgan Stanley is the last of the big U.S. banks to report earnings for the fourth quarter, navigating a stretch that included a Federal Reserve interest-rate cut and fierce global tensions. Giants JPMorgan Chase & Co. and Citigroup Inc. sailed through, while Goldman Sachs Group Inc. and Wells Fargo & Co. both took big legal charges that dragged down profits.

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Morgan Stanley’s return on equity, a measure of profitability, was 11.3 percent for the quarter, versus a range of 8.7 percent to 15 percent at peers.

Shares rose 1.5 percent in premarket trading Thursday.

Stocks in this Article

MSMORGAN STANLEY
$51.87
+0.10 (+0.19%)
GSGOLDMAN SACHS GROUP INC.
$205.04
-0.36 (-0.18%)
BACBANK OF AMERICA CORP.
$24.90
+0.03 (+0.12%)
JPMJP MORGAN CHASE & CO.
$103.81
+0.93 (+0.90%)
CCITIGROUP INC.
$43.95
0.00 (0.00%)

CEO James Gorman, now in his 10th year, has taken Morgan Stanley from a chronic earnings-day wild-card to a steadier performer. A no-nonsense Aussie -- he pledged $1 million last week to aid in wildfire relief there -- he has pivoted the firm away from trading and toward wealth management, a steadier business that now accounts for nearly half of its revenue.

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He has hit a series of financial metrics he set out for shareholders and last summer struck the largest acquisition by a major U.S. bank since the crisis, buying Solium, which helps companies manage the stock they pay employees. The deal is meant to provide a stream of new clients for Morgan Stanley’s wealth-management arm.

A priority now is growing the bank’s $550 billion money-management arm, which is adding assets organically but remains nichier than rivals. (It is small in fixed-income fund offerings and has avoided passive exchange-traded funds altogether.)

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Mr. Gorman has sounded acquisitive lately and eager to use the goodwill he has accumulated with investors and regulators. Helping his cause: Morgan Stanley shares are up 25 percent since Sept. 30, making them a better currency.