Morgan Stanley Confirms Its Status as the New Reliable: Gadfly

Reuters

Net income reported by Morgan Stanley for the fourth quarter of the year came in at $686 million.

Morgan Stanley is the last to report of the big United States banks, and like the others, its non-adjusted earnings took a one-time hit from tax reform.

Morgan Stanley earnings fell to $686 million or 29 cents per share in the fourth quarter ended December 31, from $1.67 billion or 81 cents per share, last year. Excluding the tax charges, the earnings rose to 84 cents a share, beating analysts' forecasts, from 74 cents. The financial services company reported net income of $1.67 billion for its fourth quarter of the previous year. Shares of other major banks were flat on Thursday morning. The global bank's Q4 trading revenues were $2.25 billion, a 19.5% drop from a year earlier.

Net income fell to $686 million or 29 cents per share in the fourth quarter ended December 31, from $1.67 billion or 81 cents per share, last year. Unlike stock trading and advisory fees, wealth management is a steady business where Morgan Stanley can earn fees on the assets it has under management for its roughly 3.5 million customers. That's close to the 10 percent goal that the bank's management had set.

Rate Disclosed By Bank Of Canada
The bank also said governor Stephen Poloz's team is closely watching the economy's ability to grow without driving up inflation. The Bank of Canada announced Wednesday that it raises its key interest rate by a quarter percentage-point to 1.25 percent.

Morgan Stanley's fourth quarter profit was 59% lower than the same period in 2016 following a one-off United States tax repatriation payment.

Wealth management also posted revenue gains and its 26 percent pretax profit margin topped Chief Executive Officer James Gorman's targeted range for the year.

It unveiled a fourth-quarter profit despite taking a $1.2 billion charge linked to the new United States tax law and suffering a plunge in trading revenue.

After including adjustments made in connection with the tax reform bill, Morgan Stanley Q4 2017 earnings amounted to 29 cents per share. Morgan Stanley recorded a one-time $1.2 billion tax provision, the smallest among the banks. The firm's return on common equity, which measures how well the bank is performing with the assets it has, was 9.4 percent excluding the tax charges. Investors had attributed a higher value to Goldman for about a decade but a collapse in trading revenue previous year has hit the bank harder than its rival. Stock trading, where Morgan Stanley is strongest, had steady revenue from a year ago.

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