Morgan Stanley shares slid as much as 3.5% in early Thursday trading after the bank expressed caution about the impact of the unfolding coronavirus pandemic along with
The bank noted that depressed economic activity will hurt future operating results, possibly “without the potential benefit of higher client trading activity experienced in the first quarter.” Morgan Stanley also flagged “notable” credit deterioration within institutional securities, with mark-to-market losses, net of economic hedges of $610 million on loans held for sale and a provision of $388 million for credit losses.
On the conference call, CEO
The quarterly results were “somewhat discouraging,” Wolfe Research analyst
Atlantic Equities analyst
Morgan Stanley was the last of the big banks to post earnings. On Wednesday, most declined after Bank of America Corp., Citigroup Inc. and Goldman Sachs Group Inc.
Banks across the board extended losses into a fourth day on Thursday, with the KBW bank index dropping 3.5% to the lowest intraday since April 6. Decliners included JPMorgan Chase & Co., down by as much as 3.5%, BofA, off by 4.3%, and Wells Fargo, with a 5.4% decline. The index has shed 41% since Feb. 20, when concern about the virus began accelerating, versus an 18% drop for the S&P 500.
Earlier, Morgan Stanley reported equities sales and trading revenue of $2.42 billion, topping expectations of $2.30 billion, while FICC sales and trading revenue and investment banking also beat. On the other hand, wealth management net revenue of $4.0 billion missed analysts’ estimate of $4.31 billion.
Results were “all in a mix of pluses and minuses, largely consistent with the impact of a deteriorating macro backdrop on a bank,” Credit Suisse analyst
“Morgan Stanley posted the least bad results of the major U.S. banks,” even as “top-line revenue growth was decidedly weaker than its key rivals,” Opimas CEO
Overall results beat the competition, he said, because the bank didn’t “get hit as hard” in its investment and lending portfolio. “Perhaps this was skill, perhaps dumb luck,” he said. “The second quarter will show whether Morgan Stanley can continue to defy gravity.”
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(Rewrites throughout to update share trading and add analyst comments.)
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