UPDATE: Morgan Stanley saw adjusted earnings per share of $0.71, crushing all earnings expectations from the street.Refresh for updates >
First quarter net revenue totaled $6.94 billion with debt valuation adjustments (DVA). Excluding those changes makes that number much higher—$8.9 billion versus estimates of $7.94 billion.
Shares of MS are shooting up in after-hours trading, up approximately 7 per cent in pre-market trading.
CEO James Gorman credited strength in sales and trading for much of the company’s first quarter success in the company’s earnings press release, in contrast to investor worries that these areas could be a weak point for the firm. Equity sales and trading net revenues rose 6 per cent year-over-year to $1.8 billion.
However, Gorman also stressed the company’s commitment to “maintaining a conservative capital and liquidity profile as we navigate global markets,” suggesting that the company may still be vulnerable to global shocks.
Debt valuation adjustments, however, made a huge impact on the Morgan Stanley’s performance. The company said it lost $2.0 billion as opposed to just $189 million a year ago because of “changes in Morgan Stanley’s debt-related credit spreads and other credit factors.”
Regardless of these caveats, Morgan Stanley’s earnings beat is still shaping up to be the story driving financials this morning, boosting investor confidence in the financial services sector despite persistent worries from Europe.
Morgan Stanley’s full earnings press release is available via Business Wire.
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ORIGINAL: Investment bank Morgan Stanley is scheduled to report first quarter earnings at 7:15 AM ET.
Analysts polled by Bloomberg predict that the company will report earnings per share of $0.44 and revenue of $7.94 billion after a dismal fourth quarter report.
Significant concerns about the volume of consumer, investment banking, and trading activity have led analysts to repeatedly cut back predictions throughout the year.
Perhaps more importantly, Moody’s ratings agency said in February that Morgan Stanley is one of three banks (the others are UBS and Credit Suisse) that could suffer a three-notch downgrade to from A2 to Baa2, just two notches above junk status.