Morgan Stanley, the last in the category of Large US Bank posted fourth quarter results on Friday, which has beaten the analyst’s average numbers by a significant margin. The bank reported the current quarter income of $573 Million or 28 cents per share; this is the giant leap from last year’s loss of $222 Million or 13 cents per share. The bank, excluding its debt charges earned $894 Million or 45 cents per share, whereas the analyst’s estimate on the same basis was 27 cents per share. However the bank’s fixed income and commodities trading division posted an increase in revenue of 26 percent, but this was far behind its peers who made 43 percent. The reasons attributed to this fall are the curbs imposed on banks to trade in their own money and lowering prices of certain commodities. The other divisions of the bank also posted positive numbers as below
- Sales and Trading division posted $ 2 billion from $ 867 Million YOY
- Fixed Income, Currency and trading division made $811 Million against $493 Million YOY
- Merger advisory made $454 Million; and
- Stock and bond underwriting posted $771 Million which is a rise of 62 percent from the previous year.
The bank’s Wealth Management division posted a 17% increase in PBT (Profit before Tax); the number has beaten the company’s internal target by several months. This unit of Morgan Stanley is closely watched by many investors as analysts and the CEO Gorman are banking huge on it for stable returns.
On the human resources front, the bank, adopted lots of downsizing efforts with cutting 5000 jobs in 2012 and compensation costs was cut by 4 percent i.e. $711 Million. It paid 44 percent of the adjusted revenue to its employees, down from 53 percent a year earlier in 2011. It is also rumored that one of the top executives of the bank Porat, is likely to move as Deputy Secretary in Treasury department of the country. However there was no comment on this either from Porat or from the bank. This movement is likely to see a shuffle among the top executives of the bank.
Morgan Stanley (NYSE:MS) shares rose 7.86% post results announcement and reached a new 52 week high of $22.46. With new hopes from the CEO Gorman and the positive performance of the bank, the shares are expected to move further in the days to come.
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