Last Update: 18-Jan-13 07:46 ET
Morgan Stanley shares soar 6% following beat on earnings
Morgan Stanley (MS $22.00 +1.25) reported fourth quarter earnings of $0.45 per share, $0.18 better than the Capital IQ consensus of $0.27, while revenues rose 22.7% year/year to $6.97 billion versus the $7.01 bln consensus. DVA Impact: MS reports Q4 (Dec) earnings of $0.45 per share, $0.18 better than the Capital IQ Consensus Estimate of $0.27 Income from Continuing Operations of $0.28 per diluted share excluding DVA. Income from continuing operations applicable to Morgan Stanley was $573 million, or $0.28 per diluted share, which included a net tax benefit of approximately $155 million, or $0.08 per diluted share, compared with a loss of $222 million, or a loss of $0.13 per diluted share for the same period a year ago. Q4 Net revenues were $7.0 billion included the negative impact of $511 million from the tightening of Morgan Stanley's Debt-Related Credit Spreads (DVA) (excluding DVA revenues were $7.5 billion compared with $5.5 billion a year ago). Compensation expense of $3.6 billion in the current quarter declined from $3.8 billion a year ago. Non-compensation expenses of $2.5 billion increased from $2.3 billion a year ago. Institutional Securities: Institutional Securities reported a pre-tax gain from continuing operations of $57 million compared with a pre-tax loss of $772 million in the fourth quarter of last year. Net revenues for the current quarter were $3.0 billion compared with $2.1 billion, inclusive of MBIA, a year ago. DVA resulted in negative revenue of $511 million in the current quarter compared with positive revenue of $216 million a year ago. Advisory revenues were $454 million compared with $406 million a year ago reflecting higher levels of market activity. Equity underwriting revenues were $237 million compared with $189 million a year ago reflecting higher market volume. Fixed income underwriting revenues were $534 million, our highest reported quarter, compared with $288 million a year ago. Fixed Income & Commodities sales and trading net revenues were $811 million compared with losses of $493 million a year ago. Commodities results declined meaningfully in a challenging market. Equity sales and trading net revenues of $1.3 billion were essentially unchanged from the prior year quarter, although stronger performances were noted in the derivatives and prime brokerage businesses. Compensation expense for the current quarter was $1.5 billion compared with $1.6 billion in the prior year quarter. Non-compensation expenses of $1.4 billion increased from $1.3 billion a year ago. Morgan Stanley's average trading Value-at-Risk (VaR) was $78 million compared with $63 million in the third quarter of 2012 and $105 million in the fourth quarter of the prior year. Global Wealth Management: Global Wealth Management Group reported pre-tax income from continuing operations of $581 million compared with $238 million in the fourth quarter of last year. The quarter's pre-tax margin was 17%. Net revenues for the current quarter were $3.5 billion compared with $3.2 billion a year ago. Income after the noncontrolling interest allocation to Citigroup Inc. (Citi) and before taxes was $474 million. Capital: Morgan Stanley's Tier 1 capital ratio under Basel I was approximately 17.9% and Tier 1 common ratio was approximately 14.7% at December 31, 2012. At December 31, 2012, book value and tangible book value per common share were $30.65 and $26.81, respectively, based on approximately 2.0 billion shares outstanding.
Morgan Stanley (MS $22.00 +1.25) reported fourth quarter earnings of $0.45 per share, $0.18 better than the Capital IQ consensus of $0.27, while