Morgan Stanley (NYSE:MS) stock fell over 0.6% in the pre-market session of Jan 21st, 2021 (Source: Google finance) despite decent earnings in the fourth quarter 2020.
MS in the fourth quarter of FY 20 has reported the adjusted earnings per share of $1.81, beating the analysts’ estimates for the adjusted earnings per share of $1.25 as predicted by analysts in a Bloomberg poll. The company had reported the adjusted revenue growth of 26 percent to $13.6 billion in the fourth quarter of FY 20. Investment banking revenues were up 46% from a year earlier, mainly due to higher equity underwriting fees. Revenues at Morgan Stanley’s institutional securities arm, which includes its investment banking and trading businesses, rose 39% year on year to $7 billion in the fourth quarter. Advisory revenues rose from a year ago due to higher M&A completed transactions. Equity underwriting revenues increased from a year ago due to higher revenues on IPOs, blocks and follow-on offerings. Fixed income underwriting revenues fell from a year ago as lower volumes contributed to a decline in bond revenues, partially offset by higher event driven activity.
Moreover, Wealth Management posted net revenues for the current quarter of $5.7 billion compared with $4.6 billion a year ago. Asset management revenues rose from a year ago due to higher asset levels driven by market appreciation and strong fee-based flows. Transactional revenues grew 37% excluding the impact of mark-to-market gains on investments associated with certain employee deferred compensation plans. Net interest income (NII) increased from a year ago due to incremental NII as a result of the E*TRADE acquisition as well as higher deposits and bank lending, partially offset by the impact of lower average rates.
Additionally, the company has authorized the repurchase of outstanding common stock of up to $10 billion in 2021. MS has declared a $0.35 quarterly dividend per share, payable on February 12, 2021 to common shareholders of record on January 29, 2021. The Firm’s provision for credit losses on loans and lending commitments was $5 million for the fourth quarter of 2020, compared to $57 million for the fourth quarter of 2019 and $111 million for the third quarter of 2020.