Morgan Stanley’s investment bank and its giant wealth unit beat analysts’ expectations in the first quarter, even as profits fell from a year earlier, pulled down by a decline in dealmaking and a jump in loan-loss provisions.
Net income plunged 20% to $2.84 billion from a year earlier amid a slump in the trading and banking businesses. The firm’s investment bank was able to stem a sharp decline as two key divisions beat previous analysts’ expectations, driven by its fixed-income traders and merger-advisory fees. Still, the company’s provisions for credit losses more than quadrupled from a year ago to $234 million, primarily related to commercial real estate and a deterioration in the macroeconomic outlook.
The firm’s wealth business reported $6.56 billion in revenue, exceeding estimates and up 11% from a year earlier. Morgan Stanley now oversees $4.6 trillion in that unit after adding $110 billion in net new assets.
“Approximately $20 billion came from March-related events,” said chief financial officer Sharon Isaiah, adding net new assets to the wealth-management business. Our business model is showing through our results.”
For the wealth business, it has already set a target of attracting $1 trillion of net new wealth every three years. New York-based Morgan Stanley has sought to reinforce a message that rapidly growing asset- and asset-management operations will help mitigate large swings in trading and investment banking.
Morgan Stanley shares fell 2.6% in New York at 9:37 a.m. ET. They’ve climbed 2.9% this year, including a big gain since its last earnings call in January.
Revenue from equity underwriting fell 22% to $202 million, while debt underwriting declined 5.8% to $407 million. Mergers and acquisitions bankers also slumped, with advisory revenue plunging 32%. $1.25 billion in fees from those businesses was ahead of the $1.12 billion forecast by analysts.
Morgan Stanley’s fixed-income trading business reported revenue of $2.58 billion, compared to estimates of $2.42 billion for the quarter. In equities, the bank posted revenue of $2.73 billion, again losing its equity-leader crown to Goldman Sachs Group Inc.
The bank’s investment-management business posted revenue of $1.29 billion, down 3.4%.
Net income attributable to common shareholders fell 20% to $2.84 billion.
The company’s revenue declined 1.9% to $14.5 billion, compared to estimates of $14.1 billion.
catch all corporate news And updates on Live Mint. download mint news app to receive daily market update & Live business News,