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Morgan Stanley earnings worry investors

Morgan Stanley earnings worry investors

POSTED: Thursday, April 18, 2013 - 7:00am

UPDATED: Thursday, April 18, 2013 - 7:04am

Investors were disappointed by Morgan Stanley's first-quarter results, even though the bank beat expectations.

Shares fell more than 1% in premarket trading.

Morgan Stanley earned $1.2 billion, or 61 cents per share, on $8.5 billion in net revenues.

Revenues and profits at the bank dipped from last year, but the bank has been in the process of slimming down and right-sizing itself since the financial crisis.

CEO James Gorman said that the bank "demonstrated solid momentum," noting Morgan's global wealth management division generated the highest pre-tax profit ($597 million) in the bank's history.

The bank's focus on wealth management is the clearest sign of a new era at Morgan Stanley, one that is less focused on trading and other risky moves that nearly felled the bank during the financial crisis.

Still, Morgan Stanley continues to generate a large share of its revenues and profits from trading.

Trading revenue jumped 16% from the previous year and 87% from last quarter, largely due to an increase in debt trading.

Investment banking revenues also rose from a year earlier, helped by bond and loan underwriting.

Gorman was more sanguine than many of his banking peers about the health of the global economy.

"We believe the broad economic outlook for the next several years is stronger than in the recent past," said Gorman in a statement, though he acknowledged "the global environment continues to have moments of fragility."

Morgan Stanley is the last major bank to report first quarter results.

Bank earnings from Bank of America, Goldman Sachs, JP Morgan Chase, and Wells Fargo have been mixed to poor.

Only Citigroup managed to please investors.

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