Morgan Stanley (NYSE:MS) on Wednesday posted better-than-expected fourth-quarter profits on strong equities trading revenue and as the firm held the line on compensation costs.
Unlike its rivals, which disclosed that compensation costs for Wall Street personnel soared in the quarter, Morgan Stanley kept the line on expenses. The bank posted $5.49 billion in compensation expenses, below the $5.98-billion estimate of analysts. Within its securities division, the bank said compensation fell from a year ago because of deferred compensation plans "linked to investment performance."
The bank said that equities trading revenue rose 13% from a year ago to $2.86 billion, roughly $400 million higher than the $2.44-billion estimate. The improvement was driven by rising prime brokerage revenue and a $225-million gain on a strategic investment.
Investment management also topped estimates, rising 59% to $1.75 billion because of the bank’s Eaton Vance acquisition. Analysts had expected $1.66 billion.
Meanwhile, wealth management revenue rose 10% to $6.25, essentially matching the $6.28 billion estimate, on rising asset management fees and growth in lending to clients.
Investment banking revenue rose 6% to $2.43 billion, just under the $2.54-billion estimate, on higher advisory fees from mergers activity. And fixed income trading generated $1.23 billion in revenue, a 31% decline from a year earlier and below the $1.47 billion estimate.
MS shares began Wednesday up $2.54, or 2.7%, to $96.55
