Morgan Stanley tops Goldmans in market value thanks to fixed income trading
By Alexander Bueso
Date: Thursday 16 Jan 2020
(Sharecast News) - Shares of Morgan Stanley hit their best levels since late 2007 and overtook those of Goldman Sachs on the back of a fourth quarter surge in sales from fixed income trading.
For the three-month stretch to 31 December, the lender posted a 46.0% jump in net income to reach $2.24bn for earnings per share of $1.30.
A tax benefit flattered EPS by 10 cents, which was nevertheless better than $1.20 anticipated on the Street.
For his part, chief executive officer, James Gorman, called attention to the fact that the firm's revenues topped the $10.0bn for a fourth quarter in a row, for record full-year revenues and profits.
Morgan Stanley saw topline growth of 27.0% to reach $10.86bn (consensus: $9.77bn), as revenues from fixed income trading more than doubled, from $564.0m to $1.273.0bn, reversing the end-2018 slump.
Nonetheless, while the spike in fixed income trading sales was also nearly double what analysts had expected, some analysts questioned the sustainability of the improvement.
Revenues from fixed income underwriting also grew strongly, rising from $360.0m to $500.0m, while income from 'Other Revenues" switched from -$13.0m to $216.0m thanks to mark-to-markt gains linked to corporate lending activity and from the sale of a commodities-related intangible asset.
Stronger IPO revenues, especially in Asia, saw equity underwriting sales leap 31.3% to $422.0m.
On the flip-side, equity sales and trading revenues - one of Morgan Stanley's strongest businesses - dipped 0.5% to $1.92bn.
Revenues from advisory services in its investment banking arm also fell, by roughly 11.0% to reach $654.0m, as mergers and acquisitions-related activity cooled.
As of 1614 GMT, shares of Morgan Stanley were ahead by 7.01% to $56.65.
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