- The bank reported profits that beat analyst estimates but were dragged by a $911 million loss tied to Archegos.
- The Wall Street lender brought in a profit of $15.7 billion in the first quarter, up 61% from the same period a year earlier.
- Shares of Morgan Stanley fell 1.5% in early trading.
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Morgan Stanley's first-quarter earnings report beat analyst estimates in every major category, but the strong results were overshadowed by a $911 million loss tied to the implosion of Archegos Capital.
The Wall Street giant reported earnings per share of $2.22, beating the consensus estimate of $1.68 and exceeding even the most bullish estimate. The firm also notched $15.7 billion in net revenue, beating the $13.95 billion consensus forecast.
Sales-and-trading figures for both the fixed-income and equity business also came in above expectations, as did revenue from institutional investment banking.
"The Firm delivered record results. The integrated Investment Bank continues to thrive. We closed the acquisition of Eaton Vance which takes Investment Management to over $1.4 trillion of assets," chairman and CEO James Gorman said in a statement.
But Morgan Stanley shares traded lower immediately after the report after disclosing a $911 million loss from a single prime-brokerage client confirmed by Bloomberg to be Archegos Capital.
"The current quarter includes a loss of $644 million related to a credit event for a single prime brokerage client, and $267 million of subsequent trading losses through the end of the quarter related to the same event," Morgan Stanley said in a statement.
Here are the key numbers:
- Earnings per share: $2.22 vs. $1.68 estimated by Bloomberg
- Revenue: $15.7 billion vs. $13.95 billion estimated by Bloomberg
- Equity sales-and-trading revenue: $2.88 billion vs. $2.6 billion estimated by Bloomberg
- Fixed-income sales-and-trading revenue: $2.97 billion vs. $2.19 billion estimated by Bloomberg
- Institutional investment banking revenue: $2.61 billion vs. $2.01 estimated by Bloomberg
Morgan Stanley in March completed the acquisition of US asset manager Eaton Vance, in a deal worth $7 billion to advance Gorman's push to strengthen the bank's businesses. Boston-based Eaton Vance holds about $500 billion in assets under management. Under the deal, Morgan Stanley's investment banking division will hold about $1.2 trillion of managed assets and over $5 billion in combined revenue.
"With the addition of Eaton Vance, Morgan Stanley will oversee $5.4 trillion of client assets across its Wealth Management and Investment Management segments," said Gorman said in a statement.
Morgan Stanley's earnings cap a blockbuster week for bank earnings. On Wednesday, Goldman Sachs beat revenue and profit expectations on strong trading and investment banking revenue. JPMorgan and Wells Fargo also turned in profit that surpassed Wall Street's targets. On Thursday, Citigroup Citigroup's first-quarter earnings came in above analyst estimates, as SPAC activity led to a surge in underwriting fees.
