Morgan Stanley (MS) on Tuesday reported weaker-than-expected fourth-quarter earnings, weighed down by certain charges, although the banking giant exceeded analysts’ expectations for revenue.
Per-share earnings came in at $0.85 for the December quarter, down from $1.26 the year before and missing the Capital IQ-polled consensus of $1.03. Revenue rose to $12.9 billion from $12.75 billion, topping the Street’s view for $12.82 billion. The stock fell 3.4% in Tuesday trading.
Morgan Stanley said its results were negatively impacted by a $286 million Federal Deposit Insurance Corp. special assessment to help the regulator recover losses tied to last year’s bank failures. It also recorded a $249 million legal expense that the Securities and Exchange Commission said last week would settle “fraud charges” related to certain block trades. The two charges reduced the bank’s EPS by $0.28.
“In 2023, the firm reported a solid (return on tangible common equity) against a mixed market backdrop and a number of headwinds,” Chief Executive Ted Pick said in a statement. “We are focused on achieving our long-term financial goals and continuing to deliver for shareholders.”
Wealth management revenue edged up to $6.65 billion from $6.63 billion in the 2022 quarter, driven by gains in both asset management and transactional sales. Institutional securities advanced to $4.94 billion from $4.8 billion, as investment banking revenue grew 5% to $1.32 billion.
Investment management revenue remained nearly flat at $1.46 billion as advances in asset management and related fees were offset by declines in performance-based income. Assets under management totaled $1.459 trillion at the end of December, compared with $1.305 trillion at the end of 2022.
Consolidated provision for credit losses narrowed to $3 million from $87 million year-on-year, the bank said.
“Looking ahead to the first quarter of 2024, the deposit mix will continue to be the primary driver of net interest income,” Chief Financial Officer Sharon Yeshaya said on an earnings call, according to a Capital IQ transcript. “Assuming that the forward curve holds and that our assumptions around client behavior materialize, we would expect (net interest income) in the first quarter to be roughly in line with the fourth quarter.”