Morgan Stanley ended a touch lower on Friday, down 0.04% at $53.11 per share after the group released a statement outlining the effect US President Donald Trump’s tax bill would have on the bank. It confirmed the group would take a $1.25bn hit in its fourth quarter earnings due to the tax overhaul. This $1.25bn figure is attributable to a $1.4bn tax provision following the re-measurement of certain net deferred tax assets, while $160mn of this would be offset by other positive effects. This follows on from Goldman Sachs’ announcement at the end of last year where it stated the new tax bill would it affect its fourth quarter earnings by around $5bn.
On Wednesday, Morgan Stanley traded sharply higher after the group reported better-than-expected results for the 2nd quarter. During the period, revenues came in at $9.50bn, easily surpassing estimates of $9.09bn and much higher than the $8.9bn reported a year ago. Unlike other banking firms, Morgan Stanley’s trading divisions performed relatively well. As a result of the strong revenue figures, Morgan Stanley reported adjusted earnings per share of 87 cents, up from the 75 cents recorded in 2016 and much higher than expectations of 76 cents.
Morgan Stanley dropped 3.79% to close at $42.15 per share, despite the group beating expectations in its most recent quarterly results. During the period, revenues came in at $9.02bn, sharply higher than estimates of $8.47bn. This better-than-expected performance was mainly attributable to a 39% increase in total sales and trading revenue. The group posted earnings of 81 cents per share, much higher than an expected figure of 65 cents per share. Lastly, the bank’s board of directors declared a quarterly dividend of 20 cents per share.
Yesterday saw Morgan Stanley gain 1.89%, as the group joined fellow banking giants after it also easily surpassed analysts’ expectations. During the 3rd quarter, the group saw revenues come in at $8.9bn, sharply higher than expectations of $8.17bn. In addition, Morgan Stanley reported adjusted earnings of 81 cents per share, easily beating analysts’ estimates of 63 cents per share and much higher than the 34 cents recorded in the previous corresponding period. Despite its stellar results, the group saw its return on average common equity come in at 8.7%, lower than the 10% threshold.
Yesterday, Morgan Stanley’s shares dropped 4.8% following a massive miss in its results. For the third quarter, Morgan Stanley posted adjusted earnings of $0.42 per share, down from $0.65 a year ago, and much lower than expectations of a decline to $0.62. In addition, revenues for the period came in at R7.33bn, way below expectations of $8.54bn. This was, in part, due to a 17% fall in trading revenues, as investors fled the bond, currency and commodity markets. This result capped a generally disappointing quarter for the six big U.S. banks, with only Wells Fargo managing to increase revenue during the quarter.
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