Morgan Stanley buoyant for first quarter, as bond trading delivers

Wall Street Giant Morgan Stanley (NYSE:MS) delivered a strong set of results for the quarter, driven by surges in bond trading.

The bank and investment firm earned $1.93 billion in the first quarter, 74 percent increase on the same period last year. Total revenue rose 25 percent, coming in at $9.7 billion, with trading revenue increased 57 percent to $3.2 billion.

“We reported one of our strongest quarters in recent years,” chief executive James Gorman said.

“All our businesses performed well in improved market conditions. We are confident in our business model and the opportunities ahead, while recognizing that the environment remains uncertain.”

According to the update, bond trading more than doubled following an interest rate hike by the Federal Reserve in March, helping to deliver the strong set of results for the first quarter.

The US bank also managed to achieve targets set by Chief Executive James Gorman back in January, achieving a 10.7 percent return on equity, a key measure of profitability.

This marks a relatively strong run for US banks of late, with Citigroup (NYSE:C), JPMorgan Chase (NYSE:JPM) and Bank of America (NYSE:BAC) posting similarly strong quarterly results. Conversely, Goldman Sachs disappointingly under-performed on Tuesday’s update, unexpectedly missing analyst forecasts.

Goldman executives attributed the poor results, which were the lowest in five quarters, to low volatility and volume of trading.

Traditionally Goldman Sachs has been renowned for its strong bond trading desk performances, but saw weak figures in comparison to rival Morgan Stanley, whose fixed-income trading sharply rebounded across the same period.

“We did underperform,” admitted R. Martin Chavez, Goldman Sachs’ chief financial officer, “and the underperformance was driven by commodities and currencies.”

Morgan Stanley is the last of the big Wall Street banks to report, in what marked an encouraging update in light of Goldman Sachs underwhelming figures.

Morgan Stanley’s shares ticked up about 2 percent at $42.00, prior to the US market open in premarket trading.

More articles ―