(Bloomberg) -- Morgan Stanley’s fourth-quarter profit more than doubled, boosted by trading revenue that came in well ahead of estimates on volatility tied to the US elections.
Equities was the big winner, with revenue jumping 51% in the quarter and reaching an all-time high for the full year. That helped boost net income to $3.72 billion. In the wealth business, net new assets fell just shy of estimates even as revenue topped expectations.
“What we saw within the quarter was, post-election, a lot of activity associated with clients looking to re-risk,” Chief Financial Officer Sharon Yeshaya said in an interview, citing an increase in prime-brokerage balances. “The largest part of the story was the re-risking within the equities business.”
The firm’s results follow JPMorgan Chase & Co.’s report Wednesday that its equities and fixed-income trading desks had their best fourth-quarter ever. Goldman Sachs Group Inc. said its equities traders notched a record year, and Bank of America Corp. earlier Thursday reported fourth-quarter profit that beat estimates, fueled by investment-banking fees that hit the highest in three years and net interest income that outperformed forecasts.
Shares of Morgan Stanley, up 52% in the 12 months through Wednesday, gained 1.8% at 9:56 a.m. in New York.
Morgan Stanley’s results come as Chief Executive Officer Ted Pick marks one year atop the firm. Pick, who’s best-known for resurrecting the company’s equities business after the financial crisis, became chairman of the board this month, replacing James Gorman, who ran Morgan Stanley for more than a decade.
Gorman led a pivot to wealth management, a strategy Pick has indicated he plans to continue. Net assets in the wealth unit jumped $56.5 billion, bringing the full-year tally to $252 billion. That’s still below the level Morgan Stanley needs to meet its goal of $1 trillion every three years.
Investment-banking fees rose 25% in the quarter, with advisory fees rising to $779 million, equity underwriting coming in at $455 million, and debt-underwriting at $407 million. Pick has said that the business is on the cusp of a multiyear comeback after a slowdown tied to higher interest rates. He said on a call with analysts Thursday that the pipeline for mergers and acquisitions is the highest in seven years.
Non-interest expenses were $11.2 billion in the quarter, slightly below estimates. That brought the firm’s efficiency ratio — a key profitability metric — to 69% in the quarter and 71% for the year. In its annual strategic update, Morgan Stanley reaffirmed its earlier firmwide goal of a 70% efficiency ratio.
--With assistance from Keith Gerstein.
(Updates share price in fifth paragraph, adds Pick’s M&A comment in penultimate.)
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