As net income of $4.1 billion more than doubled from the $1.7 billion reported in 2020, the New York-based investment bank posted adjusted earnings of $2.22 per share for the three months ended March 31, squashing Refinitiv's estimates of $1.70. Revenue surged 61% from the prior-year quarter to a record $15.7 billion, eclipsing expectations of $14.1 billion by a wide margin.
The company attributed its strong performance to robust Wall Street trading and investment banking operations. The recent boom in special purpose acquisition company issuance has resulted in a bonanza of fees for equity capital markets desks, and trading desks profited from strong activity across fixed income and stock markets.
As a result, Morgan Stanley's fixed income trading desks generated $2.97 billion in revenue on the back of strong credit trading, while equity trading raked in $2.88 billion. Total revenue for the institutional securities division came in at $8.6 billion.
Wealth management also recorded strong sales, which grew 47% to $5.96 billion. The acquisition of E*Trade, along with improved mortgage securities prepayment and higher bank lending, led to net interest income increasing to $1.4 billion.
Driven by record equity underwriting revenue, investment banking operations saw sales grow 128% to $2.61 billion. The investment management business' revenue of $1.3 billion was boosted by the acquisition of investment management company Eaton Vance that closed on March 1. The deal also increased the bank's assets under management to over $1.4 trillion.
As a result of these "record results," Chairman and CEO James Gorman said, "The firm is very well positioned for growth in the years ahead."
Despite the strong performance, shares of Morgan Stanley fell over 3% on Friday to trade around $78.14. GuruFocus estimates the stock has risen nearly 15% year to date.
Disclosure: No positions.
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