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Morgan Stanley Q4 2017 Earnings Results Send Shares Higher

Morgan Stanley (NYSE:MS) released its latest earnings report before opening bell this morning. On an adjusted basis, Morgan Stanley Q4 2017 earnings came in at 84 cents per share on $9.5 billion in revenue. Analysts had been looking for earnings of 64 cents per share on $9.2 billion in revenue. In the same quarter a year ago, the firm reported $9 billion in revenue.

morgan stanley q4 2017 earnings
Morgan Stanley office in midtown New York May 5th 2017 (C) VALUEWALK LLC

Morgan Stanley Q4 2017 earnings

After including adjustments made in connection with the tax reform bill, Morgan Stanley Q4 2017 earnings amounted to 29 cents per share. In the year-ago quarter, the firm reported 74 cents per share in earnings.

“In 2017, pre-tax earnings grew by 18%, driven by a 10% increase in revenues, with growth across all our business segments,” Chairman and CEO James Gorman said in a statement on the Morgan Stanley Q4 2017 earnings results. “This, coupled with strong expense discipline demonstrates the Firm’s operating leverage. We enter 2018 with strong momentum aided by rising interest rates, tax reform and an evolving regulatory framework.”

The firm took a charge of $990 million or 55 cents per share for a tax provision. The tax provision was comprised of a $1.2 billion charge in connection with the re-measurement of certain deferred tax assets using the lower corporate tax rate. That charge was partially offset by a $168 million tax benefit from the re-measurement of some reserves and related interest on “the status of multi-year Internal Revenue Service tax examinations.”

Morgan Stanley records solid growth in revenues

Morgan Stanley’s institutional securities revenues fell to $4.5 billion from $4.6 billion in the year-ago quarter. Sales and trading revenue fell to $2.7 billion in the fourth quarter from $3.2 billion a year ago. Investment banking revenue ticked up to $1.4 billion from $1.3 billion in the year-ago quarter.

Wealth management revenue grew to $4.4 billion from $4 billion a year ago. Asset management revenues rose to $2.5 billion from $2.2 billion in the year-ago quarter. Total client assets stood at $2.4 trillion at the end of the quarter, while client assets in fee-based accounts amounted to $1 trillion. Fee-based asset flows amounted to $20.9 billion.

Investment management revenues grew from $500 million a year ago to $637 million. Asset management revenues increased to $572 million from $512 million in the year-ago quarter.

Following the Morgan Stanley Q4 2017 earnings release, the firm’s stock rose by about 2% to as high as $56.40 in premarket trades.