Morgan Stanley Exceeds Q4 Revenue Expectations With Boost from Dealmaking Rebound

Jan 16, 2024: Morgan Stanley surpassed expectations in its fourth-quarter revenue, driven by a rebound in dealmaking activity, leading to a 1% increase in the investment bank’s premarket trading shares. The boost was fueled by several high-profile initial public offerings and merger announcements at the end of the previous year, instilling optimism for dealmaking in 2024. CEO Ted Pick emphasized a clear and consistent business strategy, focusing on long-term financial goals and delivering value to shareholders. As part of the effort to replenish a government deposit insurance fund depleted by around $16 billion after the collapse of two regional lenders, Morgan Stanley incurred $535 million in charges. This included a $286 million special assessment fee to the regulator and $249 million in legal charges. Investment banking revenue rose by 5% in the fourth quarter, outperforming the broader industry. Net revenue reached $12.9 billion, surpassing analysts’ expectations of $12.75 billion. However, net income decreased to $1.5 billion, or 85 cents per diluted share, compared to $2.2 billion, or $1.26 per diluted share, in the same period a year ago. The gain in investment banking, particularly M&A advisory, was labeled as “encouraging” by analyst Chris Kotowski from brokerage Oppenheimer. Morgan Stanley’s former CEO James Gorman, now serving as executive chairman, had transformed the bank into a wealth management powerhouse with an ambitious target of reaching $10 trillion in assets under management. However, concerns about a slowdown in new client assets have been raised, affecting the outlook for the business. Wealth management net revenue remained flat at $6.65 billion, while fixed income and equity net revenue also showed no change in the fourth quarter. For the full year, net revenue amounted to $54.1 billion compared to $53.7 billion a year ago, with net income decreasing to $5.18 per diluted share from $6.15 per diluted share in the previous year. The results contrast with other Wall Street giants reporting lower profit, marked by special charges and job cuts. Morgan Stanley recently agreed to pay $249.4 million to settle criminal and civil investigations into its handling of large stock trades for customers.