Morgan Stanley starts 2021 with “significant momentum,” James Gorman said Wednesday, as the bank released Q4 earnings that came in ahead of expectations. “I’m very confident in our competitive position and our opportunities for continued growth.”
The numbers are good. And that’s hardly surprising. In equities — where Morgan shines — trading revenue was $2.5 billion during the quarter, up 30% YoY and well ahead of expectations. The bank beat on FICC too, posting revenue of $1.66 billion (+31% YoY) against consensus of $1.51 billion.
Morgan’s characteristically spartan release cited “strong performance across products, geographies [and] businesses.” There was “particular strength” in equity derivatives and “notable” outperformance in FX and credit.
Read more from this quarter’s big bank earnings:
Goldman Releases Quarterly Compendium Of Large Numbers
Bank Of America Slashes Reserve, But Misses On Multiple Fronts
JPMorgan Beats Helped By Reserve Release, But Dimon Delivers Caveats, Warnings
It’s hard to find anything to complain about in Morgan’s numbers — well, unless you enjoy complaining about Wall Street raking it in during a year of economic and human tragedy on Main Street.
Net revenue of $13.64 billion for the quarter was up 26% YoY at Morgan. Consensus was looking for $11.54 billion there. The range was $10.46 billion to $12.41 billion, so Morgan easily topped the most optimistic estimate. Adjusted EPS of $1.92 was a mile above the $1.29 the market expected.
Scanning the numbers quickly (because one imagines that’s all readers will tolerate), IB revenue of $2.3 billion represented a 46% gain, and looked like an almost laughable beat. Consensus expected just $1.64 billion. Like Goldman, equity underwriting was strong indeed, rising 137% from Q4 2019. The bank noted the obvious in touting higher revenues on IPOs, blocks, and follow-ons. Also like Goldman, fixed income underwriting was softer versus a year ago, albeit just slightly.
For reference, IPOs and secondaries raised more than $430 billion last year, on Bloomberg’s data, as corporates tapped capital markets at a time when valuations soared as central banks backstopped risk assets amid the pandemic.
As Bloomberg wrote last month, “Morgan Stanley and Goldman drove much of the year’s [IPO] activity, each being credited with a share of over 10% of the traditional IPO market.” The more than quarter-trillion raised in secondaries was the most ever.
Coming quickly back to Morgan’s Q4 results, wealth management revenue of $5.68 billion was up 24%. Again (and this is a broken record) consensus wasn’t even close, looking as it was for $5.01 billion.
For the full year, Morgan’s revenue was $48.2 billion, a record. Trading revenue for the bank in 2020 was up 37% to almost $19 billion.
Gorman called the numbers “very strong” and the firm’s performance “excellent.”
(Roll out the Mr. Burns jokes.)
