Club Holdings Morgan Stanley (MS) reported better-than-expected first-quarter results on Wednesday, although the stock came in as a result of rising expenses. But the results, with no interest income, are amazing in an economic environment. Revenue declined 2% year-on-year to $14.52 billion, but exceeded analysts’ expectations of $13.92 billion, according to polls compiled by Refinitiv. Earnings fell 16% year-on-year, to $1.70, but exceeded the $1.62 per share forecast by analysts, Refinitiv data shows. Morgan Stanley’s stock initially fell about 4%, before reversing some of those losses to rise less than 1% in afternoon trading Wednesday, to around $90.50 a share. The bottom line Increasing provisions for loan losses and more than expected weighed on the shares at the beginning of the session on Wednesday – however, it showed that Morgan Stanley had a solid first quarter. In particular, the increase in food prices due to pressure on the stock market, the deterioration of the macroeconomic outlook and the high rate of interest rates of the Federal Reserve, which everything is out of control of management. Interest income came in slightly below expectations, but we’re still looking at better-than-expected results from the non-interest income side of the business. That income – most of which is generated in the economic sector – is based on wages, which means that it will not decrease because it does not depend on the increase of the interest rate. As a result, it stands to support a high number, given the constant availability. In. But the management team said Wednesday that they are seeing growth in the M&A pipeline and “some spring-like signs of reissue,” although a real rebound won’t be seen until the second half of 2023 to 2024. Asia is a bright spot for educational security, offering the third highest quarter on record, led by Japan and the reopening of China’s economy. In the economic sector, the bank can attract about $ 110 billion in new assets for the quarter. Morgan Stanley expects new assets to increase by $1 trillion every three years, which is a total of $333 billion annually. It’s $110 billion in the first quarter is a solid start to meet that target, ahead of the bank’s long-term goal of collecting $10 trillion in customer assets. We’re also pleased to hear that the company is reporting a global opportunity in its financial services division, helped by the acquisition of financial services firm Eaton Vance. Despite the hard work, Morgan Stanley remains an excellent investment bank. As the macroeconomic picture improves, we believe the bank will be able to increase top line growth and reduce expenses. We maintain a 2 rating on the stock – meaning we will wait for another pullback before buying more shares – and a price target of $105 per share. For now, we are happy to collect the 3.5% that is currently offered, as management uses the low price to buy back shares. Dividend results Office securities Contracted fund income due to lower advisory fees related to reduced M&A activity; a decrease in retained earnings due to lower interest rates; and a decline in underwriting income due to fewer non-investment grade loan issuances. Profits decreased due to lower volumes and lower global equity markets. Fixed income is due to lower costs of sales and gains related to foreign exchange. Total expenses fell 2.3% annually, to $4.72 billion, while provisions for credit losses increased to $189 million, from $44 million last year. The increase in food items reflects the growth of perceived problems in the industrial property market and the increase in macroeconomic information. Economics Economic income decreased at lower economic levels, due to the market decline. Profits were up well on a reported basis, but fell 12% year-over-year when the impact of mark-to-market gains on investments is included deferred payment plan. Profits were higher due to higher interest rates and loan growth. Total expenses for the division increased 10.4% year over year, to $4.8 billion, while allowances for loan losses increased to $45 million, from $13 million a year ago. due to the more optimistic macroeconomic outlook. In particular, the bank added about $110 billion in new assets in the first quarter, $20 billion of which management believes was the result of outflows from local banks after the collapse of Silicon Valley Bank last month. Management noted that the domestic banking crisis in the US, and the increase in interest rates last year, reduced 3% of deposits in the first quarter. That’s, in part, because investors have increased their allocations to cash equivalents like money market funds and US Treasuries by 60% over the year. About 23% of the client’s assets are held by these investors, which is higher than the level of about 18% seen in history, the official said on Wednesday. Investment management and related fees fell due to lower assets under management, affected by lower prices and outflows. Income and other items increased, mainly due to mark-to-market gains on investments related to deferred payment plans. The number of assets under management has fallen significantly due to lower capital gains compared to a year ago. Total expenses for the division increased 1.4% annually, to $ 1.12 billion. Morgan Stanley repurchased 16 million shares in the first quarter, at an average purchase price of $95.16 per share, resulting in a return of $1.5 billion to shareholders. There is about $14.25 billion left under the repurchase authority now, as of the beginning of the second quarter. Looking ahead, the board agreed to a quarter share of nearly 78 cents each. (Jim Cramer’s Charitable Trust is long MS. See here for a full list of trusts.) As a subscriber to the CNBC Investing Club with Jim Cramer, you’ll receive a trading watch before Jim’s making a trade. Jim waited 45 minutes after sending a trade alert before buying or selling a stock in his charity fund. If Jim talked about a stock on CNBC TV, he would wait 72 hours after issuing the trade alert before executing the trade. THE WANTED INVESTING CLUB COMMITS TO OUR PURPOSE AND PURPOSE, WITH EXPLANATION. No responsibility or liability is assumed, or made, by your access to any information provided in connection with the investment company. Results or earnings are not guaranteed.
The Morgan Stanley office building is seen on January 17, 2023 in New York City.
Michael M. Santiago Photographic images
Group bond Morgan Stanley (MS) reported better-than-expected first-quarter results on Wednesday, although the stock was hurt by rising expenses. But the results, with no interest income, are amazing in an economic environment.