Wealth management and investment banking firm Morgan Stanley saw profits rise 74 percent in the first quarter, helped by its well-regarded trading desks.
Morgan Stanley’s wealth management arm, a part of the firm’s business that its executives have been focusing much of its energy on, also had higher profits in the quarter.
The New York-based bank said Wednesday that it earned $1.93 billion in the first quarter, or $1 a share, compared with $1.13 billion, or 55 cents per share, in the same period a year earlier. The results topped analysts’ expectations of 89 cents per share, according to FactSet.
After Goldman Sachs reported a disappointing first-quarter profit on Tuesday, largely due to lackluster trading, there were concerns that Morgan Stanley might be in a similar position. That turned out not to be the case.
Morgan Stanley’s institutional securities division, which includes its investment bank and trading operations, had net revenue of $5.15 billion compared with $3.71 billion a year earlier. While stock sales and trading revenue were down slightly from a year earlier, typically a spot that Morgan outperforms in, the firm made up for it in its fixed-income department. Bond sales and trading revenues were $1.7 billion versus $873 million a year earlier.
Notably, the firm reported that its annualized average return on common equity, a metric used by investment banks to measure how well the bank is performing with the assets it has, was 10.7 percent in the quarter. Morgan Stanley’s top management had made it a high priority for the company to have a return on equity above 10 percent.
“We reported one of our strongest quarters in recent years. All of our businesses performed well in improved market conditions,” Morgan Stanley Chairman and CEO James Gorman said in a statement.
In wealth management, Morgan Stanley had net revenues of $4.1 billion compared with $3.7 billion in the same period a year earlier. The business expanded assets under management to $2.19 trillion from $1.999 trillion a year earlier, despite cutting back on retail locations and slightly reducing the number of wealth managers.
Morgan Stanley’s stock rose $1.06, or 2.5, percent to $42.27.