Morgan Stanley on Thursday reported profit and revenue below analysts' expectations as whipsawing markets late last year took a toll on the bank's two biggest businesses. The bank posted profit of 80 cents per share, below the 89 cent average estimate of analysts surveyed by Refinitiv. Companywide revenue declined 10 percent to $8.55 billion, compared with the $9.3 billion estimate. The firm's institutional securities business, which contains its trading and advisory units, posted $3.84 billion in revenue, nearly $500 million below the $4.33 billion estimate. The bank's wealth management division posted $4.14 billion in revenue, compared with the $4.45 billion estimate. Only the bank's smallest division, investment management, exceeded estimates, producing $684 million in revenue, versus the $656.7 million estimate. "This is not Morgan Stanley's finest hour," said Octavio Marenzi, CEO of capital markets consultancy Opimas. "In wealth management, Morgan Stanley's revenues were down 6%, while competing firms were able to eke out single-digit growth. In equities trading, Morgan Stanley was even further behind the competition, with flat revenues where other investment banks were able to benefit from market volatility and show double-digit growth." Morgan Stanley shares dropped 5.4 percent to $42.12 at 9:52 a.m. Under Chief Executive Officer James Gorman, Morgan Stanley has built out its wealth management division, a steadier business than its trading operations. In theory, the increased emphasis on wealth management should help it weather a decline in trading revenue amid turbulent markets late last year. Every major Wall Street bank to post results before Thursday booked declines of at least 16 percent in fixed income revenue as clients stepped away amid sharp movements in asset classes around the world. But Morgan Stanley posted the weakest fixed-income trading results of its peers, plunging 30 percent to $564 million, compared with the $806 million estimate. Equities trading revenue of $1.9 billion came in below the $2.04 billion estimate. Investment banking produced $1.4 billion in revenue, essentially matching analysts' estimate, as stronger advisory fees offset lower stock and bond issuance. The fourth quarter "ended messily," said Morgan Stanley Chief Financial Officer Jonathan Pruzan. Echoing what other bank managers have said, January started more favorably for trading desks, he said. "Some of the relationships that broke down are firing back again." Morgan Stanley also updated its strategic goals, giving investors guidance on performance metrics for 2019. During last year's review, Gorman said the bank could earn returns on average common equity of 10 to 13 percent, expand its market share in investment banking and trading and boost wealth management profit margins to 26 to 28 percent. The bank achieved those goals in 2018 and reiterated those targets for 2019 on Thursday. "In 2018 we achieved record revenues and earnings, and growth across each of our business segments — despite a challenging fourth quarter," Gorman said in the earnings statement. "While the global environment remains uncertain, our franchise is strong and we are well positioned to pursue growth opportunities and serve our clients." The bank is open to acquisitions in the wealth management space, Gorman said during the conference call. Shares of Morgan Stanley fell 24 percent last year, worse than the 20 percent decline of the KBW Bank Index. Here's what Wall Street expected:<doc-sep>CNBC's Jim Cramer said Thursday that Morgan Stanley's weaker-than-expected quarterly earnings report left him "confused" because he thought it was the "most stable" of the big banks. "I hate to say it, but this was the most disappointing of all" the bank earnings, Cramer said on "Squawk Box." "I had thought, and perhaps thought incorrectly, that Morgan Stanley had a mosaic of businesses that would not allow it to go down." Shares of Morgan Stanley were down more than 6 percent midmorning Thursday after the company reported quarterly profit and revenue below Wall Street's expectations. Its two biggest businesses, Wall Street trading and advisory and wealth management, suffered revenue declines amid a difficult market environment last year. Cramer, whose charitable trust owns shares of Citigroup, Goldman Sachs and J.P. Morgan Chase, had credited the stock market's recent move off its lows to the big banks after a sell-off in the fourth quarter of 2018. Bank of America, Goldman Sachs, Wells Fargo and Citigroup this week released quarterly earnings that topped expectations. The "Mad Money" host said investors are starting to realize that banks are "making more money than ever, and they're doing so with less risk and fewer employees as technology has replaced tons of white-collar jobs." While Morgan Stanley is "inexpensive," Cramer said, it's also now a "show-me" stock after reporting earnings. On Wednesday, Cramer contended that Bank of America posted the strongest earnings numbers of the big banks. He called BofA a "growth stock" while comparing it with e-commerce giant Amazon. — CNBC's Hugh Son and Elizabeth Gurdus contributed to this report.<doc-sep>Morgan Stanley said net income rose to $1.5 billion from the prior year, but that missed analysts' $1.6 billion estimate. The Wall Street bank said fixed-income trading revenue had fallen 30% to $564 million, the worst performance for that unit in three years. Morgan Stanley announced fourth-quarter results Thursday morning that missed analyst estimates. The bank posted earnings of 80 cents a share, lower than the 89 cents expected by analysts. Here are the key numbers:<doc-sep>Morgan Stanley shares fell sharply lower in pre-market trading Thursday after the bank posted weaker-than-expected fourth question earnings that looked out of step with sector profits from peers that have taken U.S. stocks to their highest levels in more than a month. Morgan Stanley (MS) - Get Report shares fell sharply lower in pre-market trading Thursday after the bank posted weaker-than-expected fourth earnings that looked out of step with sector profits from peers that have taken U.S. stocks to their highest levels in more than a month. Morgan Stanley posted earnings of 80 cents per share for the three months ending in December, nearly three times the 26 cent tally from the same period last year but well shy of the consensus forecast of 89 cents. Group revenues came in at $8.5 billion, again missing the $9.3 billion estimate, in the wake of increased market volatility and a slump in merger activity over the final three months of last year. "In 2018 we achieved record revenues and earnings, and growth across each of our business segments - despite a challenging fourth quarter. We delivered higher annual returns, producing an ROE of 11.8% and ROTCE of 13.5%, as we continued to invest in our businesses," said CEO James Gorman. "While the global environment remains uncertain, our franchise is strong and we are well positioned to pursue growth opportunities and serve our clients." Morgan Stanley shares were marked 4.11% lower at the start of trading Thursday and changing hands at $42.68 each, a move that wipes out all of its gains over the past three months. Wall Street's biggest banks have led markets higher this week, with each of Citigroup (C) - Get Report , Goldman Sachs (GS) - Get Report and JPMorgan Chase (JPM) - Get Report rising firmly after their fourth quarter earnings reports and bullish commentary on the broader economic and sector outlook for their domestic and international markets. "The big banks are leading this market charge out of the bear-den abyss and painting a stunning picture," TheStreet's founder, Jim Cramer, said last night on CNBC's Mad Money program. "These stocks got outrageously oversold in the severe, albeit short-lived, fourth quarter bear market but investors are now realizing that banks are now making literally, not figuratively, more money than ever, and they're doing so with less risk and fewer people as technologies have replaced tons of while-collar jobs." The S&P 500 Banks index, the sector benchmark, rose 2.72% yesterday and is up nearly 10% for the year, reversing most of the 13.11% decline over the fourth quarter of 2018 that included a near 20% slump in the three weeks leading up to Christmas. "The December rout was value-restoring for bank stocks," said BMO Capital Markets analyst James Fotheringham. "We are gratified by their rebound and we continue to forecast relatively benign system-wide fundamental credit quality over the next two years." Goldman has its biggest single-day gain in 10 years last night, rising 9.52% to the top of the Dow Jones Industrial Average after beating both top and bottom line estimates in a fourth quarter earnings reports that was highlighted by a 13.3% return on equity for the whole of 2018, the best in a decade. Bank of America, for its part, topped the S&P 500 last night with a 7.16% gain, its best in six and a half years, built in part on a 2% increase in its deposit base, which topped $1.34 trillion, and its expanding digital business plans. Banks earnings in particular, but the wider market in general, are also finding support from a modestly steepening yield curve, as benchmark 10-year note yields rise amid slow but steady investor optimism for longer-term growth, while shorter-term yields slip as the Federal Reserve signals a pause on interest rate increases. Benchmark 10-year notes were marked at 2.704% in overnight trading, while 2-year notes yielded 2.527%, putting the slope of the curve at around 18 basis points. The U.S. dollar index, which tracks the greenback against a basket of six global currencies, rose 0.1% in early European trading to 96.152.<doc-sep>
Morgan Stanley reported fourth-quarter earnings per share of $0.80 on revenue of $8.5 billion on Thursday. Analysts expected profit per share of $0.89 on revenue of $9.24 billion. On an adjusted basis due to a $0.07 tax benefit, EPS came in at $0.73. Shares turned lower following the release of results. Morgan Stanley had beaten expectations in each of the last eight quarters. Fixed income revenue fell 30 percent to $564 million, while equities revenue was flat. "The bank does not think the down fourth quarter is 'the new normal," said Morgan Stanley CEO James Gorman in comments to analysts. In the year ago period, the bank reported per share profit of $0.29 on revenue of $9.5 billion. Morgan Stanley points to the market volatility for the revenue miss. Ticker Security Last Change Change % MS MORGAN STANLEY 90.15 +0.74 +0.83% JPM JPMORGAN CHASE & CO. 163.69 +1.73 +1.07% GS THE GOLDMAN SACHS GROUP, INC. 371.38 +3.71 +1.01% C CITIGROUP, INC. 78.75 +1.20 +1.55% “In 2018 we achieved record revenues and earnings, and growth across each of our business segments – despite a challenging fourth quarter," said James Gorman, Chairman and Chief Executive Officer. "We delivered higher annual returns, producing an ROE of 11.8% and ROTCE of 13.5%, as we continued to invest in our businesses." "While the global environment remains uncertain, our franchise is strong and we are well positioned to pursue growth opportunities and serve our clients,” added Gorman. CLICK HERE TO GET THE FOX BUSINESS APP Third-quarter earnings per share came in at $1.17 on revenue of $9.87 billion. The board of directors declared a $0.30 quarterly dividend per share, payable February 15.