Volatility can be a good thing if you’re in the business of providing liquidity, making markets and helping people manage, transfer and mitigate risk.
That’s a really euphemistic (bordering on inaccurate) description of Wall Street trading operations, but… well, what am I if not scrupolously polite?
Morgan Stanley rounded out big bank earnings Wednesday with predictably strong results in markets, where Ted Pick’s folks ran up $5.15 billion in equities sales and trading revenue.
That was up 25% YoY and well ahead of the $4.80 billion consensus. Similar to the rest of Wall Street, the firm described “outperformance across businesses and regions, particularly in prime brokerage and derivatives.”
The figure below gives you a sense of what I mean when I say volatility’s an opportunity if you’re in the market-making business.
Citi actually saw the largest YoY bump in Q1, but that needs a caveat: Equities is a relatively small business at Citi, so there’s more room for growth. The 39% YoY increase still “only” brought revenue to $2.08 billion.
I won’t dwell too long on the rest of Morgan Stanley’s numbers. I typically use their report to bookend big bank earnings, which is what I’m doing here.
But it’s worth noting that Morgan’s efforts to make inroads in debt underwriting are still paying off. IB fees jumped nearly 36% YoY.
As the figure shows, debt underwriting chipped in big for a third straight quarter.
Pick also boasted solid results for the wealth business. As a quick reminder, you want two things from a Morgan Stanley report, at minimum: A good showing for equities trading and strength in wealth management.
Pick delivered both. And then some. As he put it Wednesday, the firm’s well on its way to “a higher plane of operating performance.”
Meanwhile, CFO Sharon Yeshaya gave the customary interview to Bloomberg, commenting on volatility and how it affects the firm’s business.
“We get a lot of questions around ‘good vol’ and ‘bad vol,'” she said. “What it did for us [in Q1 was] provide an opportunity to showcase advice.”
Yes. And also an “opportunity” to make a boat load of money.
“And also an “opportunity” to make a boat load of money.”
More like a “tanker” load of money. Massive oil revenues got to go somewhere. So where will Russia, Norway, Canada, and US put their, now massive, oil profits?
Morgan Stanley is reducing the interest they pay on checking accounts, from 3% to 2%. Was 4% a couple of years ago. One way to better your numbers.