Morgan Stanley Earnings Preview: Wall Street Expects Bank To Swing To A Profit

on April 17 2013 11:00 AM
Morgan Stanley
The current estimate for Morgan Stanley's Q1 report reflects a 21.1 percent decrease from the year-ago quarter. Reuters

Morgan Stanley (NYSE: MS) is expected to report that it swung to a profit in the first quarter, as lower costs and equity underwriting for the sixth-largest U.S. bank by assets jumped, helping to boost revenue by 17 percent.

Analysts polled by Thomson Reuters I/B/E/S expect Morgan Stanley, which reports Thursday before the markets open, to report net income of $1.41 billion, or 57 cents per share, in the first three months of this year compared with a loss in the year-earlier quarter of $119 million, or six cents per share.

Revenue is expected to be $8.35 billion, up from $6.94 billion in the first quarter of 2012. Equity underwriting is the bank's largest source of revenue, accounting for about 30 percent of total revenue and has increased this quarter. 

Morgan Stanley's stock trading accounts for about 28 percent of the bank's revenue. That part of its business has increased as the stock market has posted steady gains throughout the first quarter, according to Goldman Sachs, which also expects a strong contribution from Morgan Stanley's investment banking operations.

The bank's wealth management business has been posting "visible improvement," according to UBS, which also says Morgan Stanley has "laid out a far more clear plan to higher returns."

Among other improvements, it notes that after having acquired the stake Citigroup Inc. (NYSE:C) held in Smith Barney to gain sole ownership of the brokerage, Morgan Stanley has been cutting costs in that business. In addition, UBS said it expects the bank has deferred compensation expenses.

 

 

 

 

 

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