Morgan Stanley (MS) and Bank of America (BAC) released their fourth quarter earnings results before opening bell. Morgan Stanley posted adjusted earnings of 43 cents per share and revenue of $7.7 billion. Analysts had been expecting earnings of 33 cents per share and $7.6 billion. In last year’s fourth quarter, the firm reported revenue of $7.8 billion.
Bank of America posted earnings of 28 cents per share and revenue of $19.8 billion. Analysts had been expecting earnings of 26 cents per share and revenue of $20 billion. In last year’s fourth quarter, the bank reported earnings of 25 cents per share and $18.73 billion in revenue.
Morgan Stanley swings to profit
Morgan Stanley’s earnings including DVA were 39 cents per share, compared to last year’s loss of 91 cents per share. Annualized return on average common equity was 4.4%. Excluding DVA, it was 4.9%. The fourth quarter revenue result included a negative impact from changes in the firm’s debt-related credit spreads.
The Institutional Securities unit returned net revenues of $3.5 billion, excluding DVA. Morgan Stanley reported that its Equity division remained strong in sales and trading, while the Investment Banking unit also returned solid results. The Fixed Income and Commodities division saw weakness in trading and sales.
The firm’s Wealth Management business recorded $3.8 billion in net revenues with a pretax margin of 20% and fee-based asset flows of $11.4 billion. Net revenues for the Investment Management business amounted to $621 million. Assets under management or super vision for the segment were $406 billion.
The firm said that as of December, its pro forma fully phased-in Common Equity Tier 1 risk-based capital ratio was about 14.1%. while its Supplementary Leverage ratio was approximately 5.8%.
Shares of Morgan Stanley climbed by as much as 3.47% to $26.85 per share in premarket trading this morning.
Bank of America returns solid results
Bank of America’s net interest income climbed 2% to $10 billion, coming in roughly in line with the consensus estimate of $9.9 billion. Excluding adjustments, net interest income was $10.5 billion. Global Excess Liquidity Sources climbed to $504 billion, while total deposit balances climbed to $1.2 trillion. Return on average assets was 0.61%, while return on average common equity was 5.1% and return on average tangible common equity was 7.3%.
The Consumer Banking segment returned revenue of $7.8 billion on the back of higher loans and deposits. Bank of America’s Global Wealth and Investment Management declined to $4.4 billion as negative impacts from the bank’s asset liability allocation mostly offset higher deposits and loans.
The Global Banking unit saw revenue rise $4.4 billion, while the Global Markets segment saw revenue climb to $3.1 billion, excluding DVA. The Legacy Assets and Servicing business saw revenue fall as a result of falling loan balances and a slight decline in noninterest income.
Bank of America said its Common Equity Tier 1 capital was $163 billion, while its fully phased-in Common Equity Tier 1 capital was $154.1 billion.
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