Morgan Stanley’s MS fourth-quarter 2024 earnings of $2.22 per share handily outpaced the Zacks Consensus Estimate of $1.65. The bottom line also rose substantially from 85 cents in the prior-year quarter.
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MS shares rose almost 1.5% in pre-market trading on bumper deal-making activities and trading revenues, which majorly supported its quarterly performance.
Behind Morgan Stanley’s Headline Numbers
Like its Wall Street peers, Morgan Stanley’s investment banking (IB) business performance was solid. Advisory fees surged 47.1% year over year. Further, underwriting fees witnessed solid momentum in the quarter. Specifically, equity underwriting income surged 102.2% and fixed income underwriting income increased 4.1%. So, total IB fees (in the Institutional Securities division) grew 26.6% to $1.79 billion. We had projected it to be $1.57 billion.
The company also posted a solid trading performance. Equity trading revenues increased 51% year over year to $3.33 billion and fixed-income trading income was up 34.7% to $2 billion. Our projections for equity and fixed-income trading revenues were $2.81 billion and $1.93 billion, respectively.
Further, wealth management business performance was solid. The company’s net interest income (NII) increased, given higher lending activities and stable funding costs. However, an increase in total non-interest expenses and provisions were headwinds.
Net income applicable to common shareholders was $3.56 billion, up 157.7% from the year-ago quarter. Our estimate for the metric was $2.42 billion.
For 2024, earnings per share (on a GAAP basis) were $7.95, up 53.5% from 2023. The Zacks Consensus Estimate for earnings was pegged at $7.42. Net income applicable to common shareholders was $12.80 billion, up 50.1% from the previous year. Our estimate for the metric was $11.65 billion.
Morgan Stanley’s Revenues Jump, Expenses Rise
Quarterly net revenues were $16.22 billion, up 25.8% from the prior-year quarter. The top line handily beat the Zacks Consensus Estimate of $14.88 billion.
For 2024, net revenues were $61.76 billion, up 14.1% year over year. The top line beat the Zacks Consensus Estimate of $60.40 billion.
NII was $2.55 billion, up 34.5%. We had projected NII of $2.19 billion.
Total non-interest revenues of $13.67 billion jumped 24.3%. Our estimate for the metric was $12.25 billion.
Total non-interest expenses were $11.20 billion, up 3.8%. Our estimate for the metric was $11.04 billion.
Provision for credit losses was $115 million, significantly up from $3 million in the prior-year quarter. We had projected the metric to be $14.6 million.
Quarterly MS’ Segment Performance
Institutional Securities: Pre-tax income was $2.44 billion, surging from $408 million in the prior-year quarter. Our estimate for the same was $1.81 billion.
Net revenues were $7.28 billion, up 47.1% year over year. The upside resulted from increased advisory fees, underwriting income and trading revenues. We had projected revenues of $6.58 billion.
Wealth Management: Pre-tax income totaled $2.05 billion, up 43.8% year over year. Our estimate for the metric was $1.39 billion.
Net revenues were $7.48 billion, up 12.5%, driven by higher asset management revenues and transactional revenues. We had projected revenues of $6.62 billion.
Total client assets were $6.19 trillion as of Dec. 31, 2024, up 20.8% year over year. We had projected the metric to be $5.51 trillion.
Investment Management: Pre-tax income was $414 million, up 56.2% from the year-ago quarter. Our estimate for the same was $200.1 million.
Net revenues were $1.64 billion, up 12.2%. The improvement was attributable to a rise in asset management and related fees, and performance-based income and other revenues. We had projected revenues of $1.39 billion.
As of Dec. 31, 2024, total assets under management or supervision were $1.67 trillion, up 14.2% year over year. Our estimate for the metric was $1.48 trillion.
Morgan Stanley’s Capital Position Solid
As of Dec. 31, 2024, book value per share was $58.98, up from $55.50 in the corresponding period of 2023. The tangible book value per share was $44.57, up from $40.89 as of Dec. 30, 2023.
Morgan Stanley’s Tier 1 capital ratio (advanced approach) was 17.7% compared with 17.4% in the year-ago quarter. The common equity Tier 1 capital ratio was 15.7%, up from 15.5% a year ago.
Update on Morgan Stanley’s Share Repurchases
In the reported quarter, Morgan Stanley repurchased 6 million shares for $750 million.
Our Viewpoint on MS
The resurgence of the IB business and a solid deal-making pipeline are expected to support Morgan Stanley’s financials. Also, the company’s efforts to become less dependent on capital market-driven revenues, its inorganic expansion/strategic alliance and relatively high rates will support top-line growth. However, elevated expenses due to expansion efforts and volatile trading revenues are concerns.
Morgan Stanley Price, Consensus and EPS Surprise
Morgan Stanley Price, Consensus and EPS Surprise
Morgan Stanley price-consensus-eps-surprise-chart | Morgan Stanley Quote
Currently, Morgan Stanley carries a Zacks Rank #2 (Buy).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Morgan Stanley’s Peers
The Goldman Sachs Group, Inc.’s GS fourth-quarter 2024 adjusted earnings per share of $11.95 surpassed the Zacks Consensus Estimate of $7.99. This compares favorably with $5.48 reported in the year-ago quarter.
Goldman’s results benefited from a strong performance in its IB business and a solid Asset & Wealth Management division. A decline in expenses was another positive. However, a rise in provisions remains a near-term concern.
Solid IB and trading performance drove JPMorgan’s JPM fourth-quarter 2024 earnings to $4.81 per share. The bottom line handily surpassed the Zacks Consensus Estimate of $4.03.
Robust capital markets performance, higher mortgage banking performance, lower provisions and non-interest expenses supported JPM’s quarterly performance. On the other hand, lower NII acted as a headwind.
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