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Shares in US investment bank Morgan Stanley could do well today following its report of $0.93 earnings per share, which is well north of what analysts were expecting, with a consensus of around $0.81 per share. Much of this financial muscle in the Morgan Stanley earnings report came from its wealth management, investment management and investment banking businesses.

Meanwhile, sales and trading at the bank were facing a much more subdued environment. Total revenues were $9.2 billion, which beat expectations of $9.04 billion. This was also up on Q3, when Morgan Stanley reported revenues of $8.9 billion.

Equities trading

Despite the hit to Morgan Stanley’s trading busines, equities trading managed to hold its ground. Taking the first nine months of the year, trading at Morgan Stanley is up $8.9 billion compared with $7.4 billion last year, the bank said. This all fits in with the experience of other big Wall Street banks, like Bank of America and Citi. JP Morgan reported a hefty 27% drop in trading over the same period.

Morgan Stanley shares (NYSE: MS) closed at $48.94 on Monday. Since 8 September they have been enjoying a steady climb from $44.01, with just a slight dip in value over the past week or so. Indeed, the stock is not far off a one year high. Back in November last year you could buy Morgan Stanley shares for $32.78.



Wealth management and investment banking

The big story behind the results is the wealth management and investment banking businesses. Revenues in Morgan Stanley’s wealth management division were up 9% to $4.22 billion, with revenue per advisor of $1.1 million. This is good going, as wealth management is one of those areas where banks can sometimes focus their efforts entirely. Still, it is hard to make a big loss in wealth management in the current climate.

The investment banking number is also encouraging, climbing 15% to $1.3 billion in revenues. Morgan Stanley said the strong performance in underwriting played a big role here.

Where to trade Morgan Stanley shares

If you live in the UK you can still trade the price of Morgan Stanley shares, either using CFDs or financial spread bets. Alternatively, you can buy Morgan Stanley shares on the New York Stock Exchange using one of a number of UK brokers. However, bear in mind you will take on some GBP/USD currency risk, as Morgan Stanley shares are denominated in US dollars.

Please note this article does not constitute investment advice. Investors are encouraged to do their own research beforehand or consult a professional advisor.

Stuart Fieldhouse

Stuart Fieldhouse

Stuart Fieldhouse has spent 25 years in journalism and marketing, including as a wealth management editor for the Financial Times group, covering capital markets and international private banking, and as an investment banking correspondent for Euromoney in Hong Kong. He was the founder editor of The Hedge Fund Journal.

Stuart has worked at CMC Markets, supporting the re-launch of its global financial spread betting and CFD trading platforms. He is also the author of two books on trading, published by Financial Times Pearson. Based in The Armchair Trader’s London office, Stuart continues to advise fund managers, private banks, family offices and other financial institutions.

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