Morgan Stanley Traders Drive Earnings Surge for Bank’s Best Year

The Morgan Stanley building stands in Times Square New York, U.S., on Tuesday, June 9, 2020. New York City, which experienced the biggest and deadliest Covid-19 outbreak in the country, began reopening on June 8.
The Morgan Stanley building stands in Times Square New York, U.S., on Tuesday, June 9, 2020. New York City, which experienced the biggest and deadliest Covid-19 outbreak in the country, began reopening on June 8.

(Bloomberg) -- Morgan Stanley traders cashed in during the waning months of 2020 to round off the bank’s best year on record.

The division beat analysts’ estimates as equity revenue surged to cement the bank’s standing as the top stock-trading shop. It joined its closest peers, JPMorgan Chase & Co. and Goldman Sachs Group Inc., in consolidating their standing on the top perch of Wall Street with the pandemic helping cement their lead over smaller rivals.“The firm produced a very strong quarter and record full-year results, with excellent performance across all three businesses and geographies,” Morgan Stanley Chief Executive Officer James Gorman said in a statement Wednesday.

Ten years into Gorman’s tenure atop the firm, it has carried out two of the largest deals by a top Wall Street bank. That’s been accompanied by record earnings and a stock surge which has lifted the firm’s market capitalization to more than $135 billion -- effectively ending Morgan Stanley’s reputation as Wall Street’s smallest big bank.

Morgan Stanley weathered a turbulent start to the 2000s, just barely escaped the travails of the financial crisis and emerged in the last decade on a much firmer footing. That roller coaster ride is reflected in shares that underperformed those of chief rival Goldman Sachs for a decade, before they reversed positions for the next 10 years, even as the two firms delivered similar returns in the same timespan.

The wealth- and investment-management businesses at Morgan Stanley have given the firm more certainty than the fickle fortunes found in trading and dealmaking. The strategy has been successful enough for Goldman to try to embrace diversification too.

Equities revenue at Wall Street’s stock-trading leader climbed 30% to $2.5 billion. Analysts had expected $2.15 billion.

Morgan Stanley’s fixed-income, currencies and commodities trading revenue jumped 31% to $1.66 billion, more than the $1.51 billion analysts had estimated. Many of the big U.S. banks struggled last quarter to produce FICC results that matched rosy analyst forecasts.

The firm’s investment bankers posted revenue of $2.3 billion, more than the $1.64 billion forecast, as equity underwriting more than doubled from a year earlier. The SPAC mania that’s overtaken Wall Street -- the use of special purpose acquisition companies to take firms public -- and the rebound in corporate matchmaking, helped lift Wall Street bottom lines.

Wealth-management revenue increased 24% to $5.68 billion. The firm leans on managing money for affluent individuals and other clients for more than half its revenue every quarter, a business being boosted by the takeovers of Eaton Vance Corp. and E*Trade Financial Corp.

The bank’s shares were up 1.3% to $76 at 7:46 a.m. in early New York trading.