Boston, MA 01/21/2013 (wallstreetpr) – Morgan Stanley (NYSE:MS) took the Wall Street by surprise as it revealed better-than-expected fourth-quarter results. Apparently, the bank’s strategic decision has seemed to pave the way of its growth during the quarter.
Fourth-Quarter Results
Owing to Morgan Stanley’s ballooned legal expenses, the profit has dropped fell 70%, but its wealth-management unit has been able to recoup the weakness, essentially pushing revenues higher.
Morgan Stanley posted revenues of $181 million, as against $594 million profit in the previous year. The quarterly reports cited the pretax legal expenditure of $1.2 billion, which is 40 cents a share, associated with the mortgage-related proceedings which arose from the credit crisis. Otherwise, after accounting for the legal costs, it reported 50 cents of earnings per share and revenues grew to $8.2 billion, up 9.7%.
As per the Analysts’, who weresurveyed by Thomson Reuters estimated 45 cents earnings per share,and had kept the revenue at $8.01 billion, exclusive of accounting effects.
Strategies Played A Major Role
So far, Morgan Stanley showed up a strong quarterly performance as year to date returns of almost 7% have driven the stock prices to above $33 per share, after which the bank valuation stands at $65 billion.
The growth saga of Morgan Stanley can be accredited to its well-defined strategic decisions, which focused on the retail brokerage and asset management arm, and the strong equity markets across the globe also bolstered the bank’s actions. After the staged agreement, through which Morgan Stanley bought the outstanding stake from Citigroup will allow it to take the full ownership of the Smith Barney unit.
In the meanwhile, the emphasis on brokerage and asset management, being less volatile in an industry, came on just the right time. The weaker trading was largely offset by the firm exposure in the equities.
Furthermore, the bank in its strategic update has raised the 2015 pre-tax profit margins to 22-25% from the earlier 20-22% by 2015, signaling robust earnings growth up ahead.
