Morgan Stanley tops estimates on strong equities and fixed income trading revenue

Morgan Stanley on Thursday topped estimates for fourth quarter earnings and revenue as the firm’s equities and fixed income traders exceeded expectations.

Here’s what the company reported:

• Earnings: $2.22 a share vs. $1.70 LSEG estimate
• Revenue: $16.22 billion, vs. $15.03 billion estimate

The bank said that quarterly profit more than doubled to $3.71 billion, or $2.22 a share, from a year earlier, when it had a pair of regulatory charges.

Revenue rose 26% to $16.22 billion as results in all of the bank’s major businesses improved.

It was the firm’s equities trading business that shone brightest in the quarter, producing a 51% jump in revenue to $3.3 billion, or nearly $650 million more than the StreetAccount estimate. Morgan Stanley cited increased client activity and strength in its prime brokerage business that caters to hedge funds.

The firm’s fixed income operations saw revenue jump 35% to $1.93 billion, about $250 million more than the StreetAccount estimate, on rising activity in credit and commodities markets.

Investment banking revenue rose 25% to $1.64 billion, essentially matching the StreetAccount estimate, on rising advisory and equity capital markets results.

Wealth management saw revenue rise 13% to $7.48 billion on rising asset levels and greater fees, topping the estimate by $120 million.

While bank stocks have been supported by enthusiasm over expectations for rising deal activity, it was actually the trading side that helped Morgan Stanley and rival Goldman Sachs more in the quarter. Traders at both firms took advantage of heightened activity leading into and after U.S. elections in November.

Morgan Stanley shares rose 2% in premarket trading.

On Wednesday, JPMorgan Chase, Goldman and Citigroup each topped expectations, helped by better-than-expected revenue from trading or investment banking.

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