Covid Winner: Morgan Stanley Profits Rise 48%

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The U.S. economy throttled down in the fourth quarter as the pandemic surged, lockdowns were reimposed, and the country prepared for the presidency of Joe Biden.

Wall Street, however, hit the accelerator. Morgan Stanley said Wednesday that fourth-quarter profits rose 48 percent from a year earlier, highlighting the unevenness of the pandemic’s effect on the U.S. economy.

The storied Wall Street firm made $3.39 billion in the fourth quarter, up from $2.31 billion in the final three months of 2019.

That works out to $1.81 per share,  beating the $1.30-per-share profit that analysts had forecast.

Like its primary rival, Goldman Sachs, who also saw a massive profit increase, Morgan Stanley saw a surge of revenue in its core investment banking and trading operations.

Trading revenue rose 32 percent, with both stock and bond trading generating more revenue for the firm. Trading revenues are a huge source of bonuses for Wall Street’s high-flying traders, although they rarely translate into improved stock performance for shareholders.

Investment banking revenues soared 46 percent, mostly due to higher equity underwriting fees. Morgan Stanley has a large business taking companies public, and several large tech firms went public in the last three months of the year. That was a boon for the firm’s underwriting business.

Morgan Stanley’s wealth management arm, which the company grew over the last decade to help the firm find steadier sources of profits instead of the boom-bust cycle of markets, also had a strong quarter. This likely benefited from the huge rally in stock prices that began in late April. Net revenues in this unit were up 24 percent from a year earlier.

–The Associated Press contributed to this repot.

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