Morgan Stanley revenues hammered by volatility in bond markets
By Alexander Bueso
Date: Thursday 17 Jan 2019
(Sharecast News) - Morgan Stanley saw its profits sink at the tail-end of 2018 as volatility in bond markets hammered revenues at the group's bond trading unit.
For the three months ending in December, the lender posted a 10% drop in net revenues versus a year ago to reach $8.55bn (consensus: $9.29bn), although net income was 138% higher at $1.53bn as a result of the tax charges incurred at the end of 2017 in the wake of tax cuts in the US.
Profits before tax and on a continuing basis were 25% lower at $1.857bn.
Adjusted earnings per share meanwhile came in at 73 cents (consensus: 89 cents), which was 13% less than a year ago and 38% below the prior quarter's result.
Revenues at its institutional securities arm shrank 15% to $3.8bn, with revenues at the bond traing unit down 30% to $564m. Its wealth management division did not escape from the market turmoil unscathed, with revenues falling 6% to $4.1bn.
On the investment management side of the business meanwhile, revenues grew by 7% to $684m.
To take note of, Morgan Stanley also published a strategic update on Thursday, guiding towards a medium-term rate of return on its tangible common equity of between 11.5% and 14.5%.
In 2018 it achieved a RoTCE of 13,2%.
For its return on equity, management guided towards a range of 10% to 13%, in comparison to 11.5% in 2018.
Nevertheless, as of 1350 GMT shares of Morgan Stanley were 3.75% higher to $44.49.
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