Morgan Stanley quarterly profit beats on wealth management, M&A boom

Morgan Stanley's results rounded out a mixed earnings season for the nation's largest banks that rode the M&A boom, but were dragged down by weak trading and higher expenses, which surged as they splurged to retain key personnel in a race for talent. Dealmaking activity is expected to remain robust despite the prospect of debt becoming costlier, while Main Street lenders are expected to post healthier profits from consumer lending as interest rates are likely to rise later this year.

Morgan Stanley beat quarterly profit expectations on Wednesday as the Wall Street investment bank capitalized on a boom in mergers and acquisitions and generated robust fees from advising on deals.

The bank's wealth management unit also turned in a strong fourth quarter with revenue rising more than 10% to $6.25 billion. Morgan Stanley's results rounded out a mixed earnings season for the nation's largest banks that rode the M&A boom, but were dragged down by weak trading and higher expenses, which surged as they splurged to retain key personnel in a race for talent.

Dealmaking activity is expected to remain robust despite the prospect of debt becoming costlier, while Main Street lenders are expected to post healthier profits from consumer lending as interest rates are likely to rise later this year. Morgan Stanley, which advised on 420 deals last year, ranked third in the global investment banking league tables, following larger rivals Goldman Sachs and JPMorgan Chase, according to data from Dealogic.

League tables rank financial services firms based on the amount of investment banking advisory fees they generate. Investment banking revenue rose 6% to $2.43 billion. The unit includes the bank's advisory, equity underwriting and fixed income underwriting businesses.

While equity underwriting revenue was down from last year, Morgan Stanley still advised on some of the biggest initial public offerings, including Amazon-backed electric vehicle maker Rivian Automotive Inc, to generate $53 million during the quarter. In 2021, Wall Street investment banking giants rode the dealmaking wave and advised on several major business combinations and helped put together deals involving special purpose acquisition companies.

Profit rose to $3.59 billion, or $2.01 per share, in the quarter ended Dec. 31, from $3.27 billion, or $1.81 per share, a year earlier. Despite the blow from trading, Morgan Stanley's earnings came in ahead of expectations.

Analysts on average were expecting the bank to report a profit of $1.91 per share, according to IBES data from Refinitiv. Revenue rose to $14.52 billion on for the quarter compared with $13.59 billion in the year-ago period.

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