Morgan Stanley beats by $0.08, beats on revs (29.89)
Reports Q1 (Mar) earnings of $0.68 per share, $0.08 better than the Capital IQ Consensus Estimate of $0.60; revenues rose 9.6% year/year to $8.93 bln vs the $8.55 bln consensus.
- Income from continuing operations applicable to Morgan Stanley was $1.5 billion, or $0.72 per diluted share, compared with income of $981 million, or $0.49 per diluted share, for the same period a year ago. Results for the current quarter included positive revenue related to changes in Morgan Stanley's debt-related credit spreads and other credit factors (Debt Valuation Adjustment, DVA) of $126 million, compared with negative revenue of $317 million a year ago. Excluding DVA, net revenues for the current quarter were $8.8 billion compared with $8.5 billion a year ago. Income from continuing operations applicable to Morgan Stanley was $1.4 billion, or $0.68 per diluted share, compared with income of $1.2 billion, or $0.60 per diluted share, a year ago.
- Compensation expense was $4.3 billion compared to $4.2 billion a year ago. Non-compensation expenses were $2.3 billion compared to $2.4 billion a year ago.
- Reported pre-tax income from continuing operations of $1.4 billion compared with $799 million in the first quarter of last year. Net revenues for the current quarter were $4.6 billion compared with $4.1 billion a year ago.
- Advisory revenues of $336 million increased from $251 million a year ago reflecting higher levels of M&A activity.
- Equity underwriting revenues of $315 million increased from $283 million a year ago reflecting higher IPO volumes.
- Fixed income underwriting revenues of $485 million increased from $411 million a year ago reflecting an increase in loan fees.
- Equity sales and trading net revenues of $1.7 billion increased from $1.6 billion a year ago reflecting higher levels of client activity across products and particularly strong performance in prime brokerage.
- Fixed Income & Commodities sales and trading net revenues of $1.7 billion increased from $1.5 billion a year ago. Results reflect strong performance in commodities and solid results in credit and securitized products, despite lower volumes across most fixed income businesses.
- Other sales and trading net losses of $244 million compared with net revenues of $72 million a year ago, primarily reflecting costs related to the Firm's long-term funding.
- Value-at-Risk (VaR) was $50 million compared with $51 million in 4Q13.
- Reported pre-tax income from continuing operations of $691 million compared with $597 million in the first quarter of last year. Net revenues for the current quarter were $3.6 billion compared with $3.5 billion a year ago.
- Asset management fee revenues of $2.0 billion increased from $1.9 billion a year ago primarily reflecting an increase in fee based assets and positive flows.
- Transactional revenues of $1.0 billion decreased from $1.1 billion a year ago primarily reflecting lower closed-end fund and other new issue activity.
- Net interest income of $539 million increased from $413 million a year ago on higher deposit and loan balances.
- Client assets in fee based accounts of $724 billion increased 17% compared with the prior year quarter. Fee based asset flows for the quarter were $19.0 billion.
- Reported pre-tax income from continuing operations of $263 million compared with pre-tax income of $187 million in the first quarter of last year. Net revenues of $740 million increased from $645 million in the prior year. Results primarily reflect higher gains on investments in Merchant Banking and higher results in Traditional Asset Management, partly offset by lower gains on investments in Real Estate Investing.
- Assets under management or supervision at March 31, 2014 of $382 billion increased from $341 billion a year ago primarily reflecting market appreciation and positive flows. The business recorded net flows of $6.0 billion in the current quarter.
- Morgan Stanley's Common Equity Tier 1 capital ratio was approximately 14.1% and its Tier 1 capital ratio was approximately 15.6% at March 31, 2014. At March 31, 2014, book value and tangible book value per common share were $32.38 and $27.41,18 respectively, based on approximately 2.0 billion shares outstanding.