By Dhirendra Tripathi
Investing.com – Morgan Stanley stock (NYSE:MS) traded 2% higher Wednesday as deal-making and wealth management services drove its fourth-quarter earnings higher.
The bank had to make significantly lower provisions for losses as economies rebounded and asset quality improved. That also boosted profits which rose 9% at $3.7 billion even as revenue fell short of estimates, rising 7% to $14.5 billion.
Compensation expense for the quarter was barely higher from the previous year but non-compensation expense jumped more than 10% as costs related to the acquisition of fund manager Eaton (NYSE:ETN) Vance weighed.
The bank’s bond trading business took a hit from rising government yields at the end of a volatile year for markets. The 31% slump in fixed income revenue overshowed the surprise 13% increase in equities-trading revenue in the fourth quarter. The equity-trading business booked a significant one-time mark-to-market gain of $225 million on a strategic investment.
Investment banking revenue rose 6%, to $2.4 billion, but the weakness in the fixed income business proved to be too much as overall quarterly revenue from the institutional securities business fell more than 4%, to $6.7 billion.
Both wealth management and asset management grew at the bank. Wealth management revenue rose more than 10% to top $6 billion. The business added net new assets of $127 billion during the quarter, 73% higher than last time. Total client assets under management at the end of the year were $4.9 trillion, up 23%.