Unlike most other big banks reporting Q4 earnings, some of which beat on sales and trading, other missed, the common theme was the surge in expenses, i.e., compensation, with JPMorgan and Goldman stock punished due to the unexpected spike in banker wages. But that wasn't the case at Morgan Stanley, which this morning was the 6th and final bank to report Q4 earnings, which beat on the top and bottom line (despite some rather mixed results by operating group, including misses in FICC, Investment Banking, Wealth Management, Equity and Fixed Income underwriting) reported expenses that came in well below expectations and rose just 1% compared to last year, well below the double digit increase observed by other banks. This, to a Wall Street that had suddenly freaked out about how much it is paying itself, was the best news of the week and MS shares rose shares rose as much as 4.8% in premarket trading.
Here is what Morgan Stanley reported for Q4 2021:
- Net revenue $14.52 billion, +6.8% y/y, beating the estimate of $14.44 billion
- Adjusted EPS $2.08 vs. $1.92 y/y, beating the estimate of $1.94 (unadjusted EPS $2.01 vs. $1.81 y/y)
- Net income rose 9% to $3.7 billion, up from $3.385 billion, and beating the estimate of $3.46 billion.
Drilling into the various revenue streams:...
- Equities sales & trading revenue $2.86 billion, +13% y/y, beating the estimate $2.49 billion
- FICC sales & trading revenue $1.23 billion, -31% y/y, missing the estimate $1.44 billion
- Institutional Investment Banking revenue $2.43 billion, +5.7% y/y, missing the estimate $2.47 billion
- Wealth management net revenue