Morgan Stanley, the second-largest U.S. investment bank, said fourth-quarter shareholder profit was $600 million, or 41 cents a share, compared with $376 million, or 29 cents a share, in the same quarter last year.
Morgan Stanley shares gained about 1 percent in premarket trading.
The following is reaction from industry analysts and investors:
GEOFF WILKINSON, HEAD OF INVESTMENT RESEARCH, MINT SECURITIES, LONDON
There is an issue here that volume of execution...this is still part of the deleveraging of credit thing, execution-based brokerage revenues will be down mathematically because hedge funds can't get the capital to leverage. Banks have chopped out proprietary trading. We've lost a lot of volume in the market.
The other thing is the bonus kerfuffle; banks obviously have to increase their fixed cost substantially. It's obviously a direct cost impact.
NICK SERFF, MARKET ANALYST, CITY INDEX
High expectations were baked into the results, they were expected to be good so the market is not showing much reaction to them.
RICHARD BOVE, BANK ANALYST WITH ROCHDALE SECURITIES LLC
Its been a running theme for these banks for several quarters now. Is the industry undergoing a structural change with reduced trading, or is this just a function of inactivity and people unwilling to trade, given the current market. These companies are looking at markets that have lost, in some cases, two-thirds of their activity since the crisis, and it looks like its not coming back anytime soon. It will take a few years for these banks to adjust.
MIC MILLS, HEAD OF ELECTRONIC TRADING, ETX CAPITAL. LONDON
The Morgan Stanley results are a bit of a damp squib, although its investment banking arm did well in contrast to Citi and Goldman. But the market is under a cloud today and nothing can move it.
DAVID CARTER, CHIEF INVESTMENT OFFICER AT LENOX ADVISORS IN NEW YORK
Morgan Stanley is a mixed bag. There's some good news, but trading revenue is down. That's been a problem across most Wall Street firms. Hopefully the banking segment can pick up the slack, as its critical that financials do well as they're a big part of equity markets and tend to lead the market.
It seems like Morgan Stanley has made good internal changes, but to my mind, earnings were a little light. The whole Street seems to be having a problem with trading. Morgan Stanley did, Citigroup
(Reporting by Ryan Vlastelica in New York, Joe Rauch in Charlotte, North Carolina and Jon Hopkins, Dominic Lau and Simon Falush in London)