Morgan Stanley (MS) Q1 Earnings Top on Revival of IB Business

Core Viewpoint - Morgan Stanley's first-quarter 2024 earnings significantly exceeded expectations, driven by a resurgence in the investment banking sector after a prolonged downturn since 2022 [1][2]. Financial Performance - Earnings per share for Morgan Stanley reached $2.02, surpassing the Zacks Consensus Estimate of $1.69 and up from $1.70 in the same quarter last year [1]. - Net revenues totaled $15.14 billion, exceeding the Zacks Consensus Estimate of $14.47 billion, reflecting a 4% year-over-year growth [1]. Investment Banking Sector - The investment banking business showed a notable recovery, contributing to the improved performance after a period of subdued activity due to high inflation, monetary tightening, and geopolitical tensions [2]. - The Institutional Securities segment reported revenues of $7.02 billion, a 3% increase year-over-year, driven by a rise in underwriting and equity trading revenues [3]. - Equity underwriting income surged by 113%, while fixed income underwriting income increased by 37%. However, advisory revenues declined by 28%, leading to total investment banking fees growing by 16% to $1.45 billion [3]. Comparison with Competitors - JPMorgan also experienced a decline in advisory fees but saw improvements in underwriting, with equity underwriting fees up 51% and debt underwriting fees up 58%, resulting in total IB fees growing by 21% to $2 billion [3]. - Goldman Sachs reported a 24% increase in advisory fees, with both debt and equity underwriting fees rising by 38% and 45%, respectively, leading to a 32% increase in total IB fees to $2.08 billion [4]. Trading Performance - Morgan Stanley's equity trading revenues increased by 4% year-over-year, while fixed-income trading income saw a decline of 4% [4]. - In contrast, Goldman Sachs experienced growth in both FICC and equity revenues, each increasing by 10% [4]. Wealth and Investment Management - The Wealth Management and Investment Management segments performed well, with total client assets rising by 21% year-over-year and total assets under management increasing by 10% [4]. Income and Expenses - Fee income for Morgan Stanley grew by 10% to $13.34 billion, while net interest income declined by 23% due to higher interest expenses [5]. - Non-interest expenses increased by 2% year-over-year, totaling $10.74 billion [5].