Financial services firm Morgan Stanley reported Wednesday weak profit, revenues and assets under management in its first quarter, noting that the businesses navigated a volatile market environment. Earnings per share and topline, however, beat market estimates.
In pre-market activity on the NYSE, Morgan Stanley shares were losing around 4.2 percent to trade at $86.09.
James Gorman, Chairman and Chief Executive Officer, said, “The Firm delivered strong results with a ROTCE of 17 percent in a very unusual environment, demonstrating the strength of our business model. 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.”
For the first quarter, net income applicable to shareholders fell 20 percent to $2.84 billion from last year’s $3.54 billion. Earnings per share declined to $1.70 from $2.02 last year.
On average, 17 analysts polled by Thomson Reuters expect earnings of $1.62 per share for the quarter. Analysts’ estimates typically exclude special items.
Sequentially, net earnings climbed 34 percent from the preceding fourth quarter’s $2.11 billion or $1.26 per share.
Provision for credit losses surged to $234 million from last year’s $57 million a year ago.
Morgan Stanley’s net revenues for the quarter were $14.52 billion, down 2 percent from $14.80 billion a year ago. Sequentially, net revenues grew 14 percent.
Analysts expected revenues of $13.92 billion for the first quarter.
Total non-interest revenues were $12.17 billion, down 3 percent from last year, but up 17 percent sequentially. Net interest income grew 6 percent year-over-year to $2.35 billion.
In the quarter, Investment Banking revenues were down 24 percent from a year ago, Equity net revenues fell 14 percent and fixed income net revenues dropped 12 percent.
Commissions and fees fell 13 percent, and asset management revenues declined 8 percent.
However, trading revenues grew 12 percent and Wealth Management Net revenues increased 11 percent from a year ago.
Assets under management or AUM as of March 31 was $1.36 trillion, down from $1.45 trillion last year due to the decline in asset values and the cumulative effect of outflows.
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