Morgan Stanley, owner of the world’s largest brokerage, reported profit that beat analysts’ estimates as equity-trading revenue increased and earnings from wealth management climbed to a record.
Fourth-quarter net income fell to $181 million, or 7 cents a share, from $594 million, or 29 cents, a year earlier, the New York-based company said today in a statement. Profit was 50 cents a share excluding an accounting charge tied to the firm’s own debt, a tax benefit and legal expenses, beating the 44-cent average estimate of 26 analysts surveyed by Bloomberg.
Morgan Stanley’s stock climbed 64 percent in 2013, the most among the 10 largest global investment banks, as Chief Executive Officer James Gorman cut costs and improved margins at the brokerage unit. A 30 percent jump in the Standard & Poor’s 500 Index helped boost equity trading and wealth-management revenue.
“Morgan Stanley is a little more levered toward the equity-centric businesses than competitors,” Devin Ryan, a bank analyst at JMP Group Inc. in New York, said before the results were announced. “There’s positive momentum in those businesses going into 2014.”
The company’s $1.2 billion addition to legal reserves in the fourth quarter pertained to “mortgage-related matters, specifically litigation and investigations related to residential mortgage-backed securities and the credit crisis,” according to the statement.
Legal Issues
“We are continuing to address many of the legal issues from the financial crisis,” Gorman, 55, said in the statement. “We look forward to further progress on our strategic goals as we move into 2014 with strength and momentum.”
Morgan Stanley rose 3 percent to $32.96 in New York trading at 9:51 a.m. The shares have more than doubled since June 2012, and through yesterday were 8.1 percent above the price when Gorman took over at the end of 2009.
Revenue excluding accounting adjustments rose to $8.2 billion from $7.47 billion a year earlier. Book value per share climbed to $32.29 from $32.13 at the end of September.
The company surpassed revenue expectations with “better- than-expected strength in investment banking, global wealth management, and asset management,” Keith Horowitz, a Citigroup Inc. analyst, wrote in a note to investors.