Morgan Stanley’s profit more than doubles on boost from dealmaking, stock sales

10:07 am Thursday, January 16th, 2025

By Niket Nishant and Tatiana Bautzer

(Reuters) -Morgan Stanley’s profit more than doubled in the fourth quarter, fueled by a wave of dealmaking and stock sales that drove its revenue to a full-year record.

The earnings rounded out a robust quarter for Wall Street banks, which benefited from a surge in mergers and acquisitions due to a strong U.S. economy, interest-rate cuts and expectations of lighter regulation under incoming President Donald Trump.

It also wraps up a strong first year for CEO Ted Pick, who had won a three-man contest for the top job. Pick said 2024 was “one of the strongest years in the firm’s history” as Morgan Stanley garnered record net revenue of $61.8 billion.

“We are seeing most factors that were limiting deals, such as regulatory challenges, high interest rates and a closed IPO market changing,” Chief Financial Officer Sharon Yeshaya said in a phone interview, referring to initial public offerings.

Investment banking revenue grew 25% in the quarter as fees from stock sales doubled from a year earlier.

Profit grew to $3.7 billion, or $2.22 per share, for the three months ended Dec. 31, compared with $1.5 billion, or 85 cents per share, a year ago. Analysts, on average, had expected $1.7 per share, according to estimates compiled by LSEG.

Busier activity across geographies, notably in Asia and the Americas, lifted its equity trading revenue by 22% to a record.

Morgan Stanley’s quarterly investment banking revenue rose 25% to $1.64 billion, echoing results at rivals Goldman Sachs and JPMorgan Chase on Wednesday.

The bank also benefited from easier comparisons with last year, when it took certain one-time charges to refill a government deposit insurance fund and to settle a government probe.

Shares of the investment bank rose 2.1% before the bell. Last year, they were among the top performers in the large-cap banking category, gaining nearly 50%.

Globally, investment banking revenue jumped 26% to $86.80 billion in 2024, according to data from Dealogic. Wall Street CEOs and dealmakers expect more large deals to be approved under the Trump administration than his predecessor Joe Biden.

WEALTH MANAGEMENT

Morgan Stanley’s revenue from wealth management rose 13% to $7.5 billion, helped by record revenue in asset management.

The unit provides the bank with stable income, offsetting the volatility from investment banking and trading.

The bank has set a target of managing $10 trillion in client assets and reached $7.9 trillion in the quarter.

Most of the net new assets came from financial adviser relationships, Yeshaya said. Elsewhere, the CFO expects new IPOs this year to draw new assets into Morgan Stanley’s workplace division, which manages relationships for company employees. Revenue rose 26% to $16.2 billion in the fourth quarter, also beating expectations of $15 billion, according to LSEG data.

(Reporting by Niket Nishant in Bengaluru and Tatiana Bautzer in New York; Editing by Lananh Nguyen, Arun Koyyur and Nick Zieminski)