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Morgan Stanley Shares Rise After 1Q Revenue Drops Less Than Feared

Investing.com - Shares in Morgan Stanley (NYSE:MS) rose to their highest level in seven months after the bank appeared to navigate volatility in global markets in the first quarter slightly better than the market had expected.

Wall Street’s second-biggest investment bank said revenue fell by 7.1% from a year earlier, due to declines in revenue from both equity and bond markets, as well as in its advisory business. Investment banking revenues were down 24% from a year ago. Earnings per share fell to $1.39 from $1.45, as the bank offset the drop in revenue by setting aside less money for variable compensation.

As of 0730 AM ET (1130 GMT), the shares were up 3.2% in premarket trading at $48.50

All of Morgan Stanley’s major rivals have posted weak returns on their markets-focused businesses – not least because of comparison effects with an extraordinarily high base a year earlier. However, in contrast to Bank of America (NYSE:BAC), JPMorgan Chase (NYSE:JPM) and Citigroup (NYSE:C), Morgan Stanley has no meaningful exposure to the consumer or small business lending to compensate.

Even so, revenue of $10.29 billion was nearly 4% better than a consensus forecast of $9.91 billion, while earnings per share of $1.33 was some 14% ahead of forecasts. The bank said around 6c of the earnings improvement was due to “intermittent” tax-related factors.

In a statement, chairman and chief executive James Gorman acknowledged that the bank had had a “slow start” to the year, but said the bank was “well positioned to serve our clients and invest in our business.”

U.S. Bancorp ekes out modest gains in 1Q

Earlier on Wednesday, US Bancorp (NYSE:USB) had fleshed out a solid but unspectacular quarter for the financial sector, eking out a 4% rise in revenue to $5.58 billion in the first three months of the year. That followed a mixed set of numbers on Tuesday from Bank of America, where a sharp drop in revenue from equities and fixed-income trading was offset by a strong performance in retail and business lending.

JPMorgan and Citigroup have emerged as the two biggest winners on Wall Street so far from the first-quarter earnings season. Their shares are up around 5% since Friday.

Stay up-to-date on all of the upcoming earnings reports by visiting Investing.com's earnings calendar

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