Earnings

Morgan Stanley posts earnings of 55 cents a share vs. 46 cents expected

Morgan Stanley beats estimates as profits decline
VIDEO1:2101:21
Morgan Stanley beats estimates as profits decline

Morgan Stanley on Monday reported quarterly earnings that topped analysts' expectations, but profit more than halved as the Wall Street bank's trading and investment banking businesses took a hit from market volatility early in the year.

Shares of Morgan Stanley moved higher in premarket trading immediately following the report. (Click here to track the stock.)

Earnings applicable Morgan Stanley's common shareholders fell 54.4 percent to $1.06 billion, or 55 cents per share, in the quarter ended March 31, from $2.31 billion, or $1.18 per share, a year earlier. Excluding an accounting adjustment, the bank also earned 55 cents per share.

Morgan Stanley reported revenue of $7.8 billion, compared with $9.9 billion a year ago.

Analysts expected Morgan Stanley to post first-quarter earnings of 46 cents per share on $7.87 billion in revenue, according to a consensus estimate from Thomson Reuters.

Sliding commodity and oil prices, worries about the Chinese economy and uncertainty about U.S. interest rates made for wobbly markets in January and February, scaring off traders, investors and companies hoping to list on stock exchanges.

Morgan Stanley shares have struggled along with multiple other financial stocks this year. The financial services firm's stock has plunged about 19 percent, while Bank of America, Citigroup, JPMorgan Chase, and U.S. Bancorp shares have fallen about 17, 13, 6 and 4 percent this year, respectively.

Volatile markets and energy sector loan losses, among other factors, cut into other key firms' first-quarter earnings. Last week, JPMorgan, Bank of America, and Citigroup all reported that profit fell from the prior-year period.

A Bank of America customer uses a bank card
Bank of America posts earnings of 21 cents a share vs. 20 cents estimate

However, all three of those firms beat analysts' earnings expectations, according to consensus estimates from Thomson Reuters.

Goldman Sachs, Morgan Stanley's traditional rival, will wrap up the earnings season for big U.S. banks on Tuesday.

"The first quarter was characterized by challenging market conditions and muted client activity," Chief Executive James Gorman said in a statement.

"While we see some signs of market recovery, global uncertainties continue to weigh on investor activity."

Morgan Stanley's stock fell about 21 percent in the quarter — the sharpest decline of any big U.S. bank.

Adjusted revenue from fixed income and commodities trading fell 54.1 percent to $873 million in the quarter, while equities trading revenue declined 9.3 percent to $2.06 billion.

Morgan Stanley has been shifting its focus away from more volatile areas such as bond trading and towards more stable businesses such as wealth management

Revenue from wealth management fell 4.3 percent to $3.67 billion during the quarter.

Reuters contributed to this report

Berkshire Hathaway Live Event