A Look At Morgan Stanley's Big Q4 Earnings Miss

Big bank earnings season continued Thursday with Morgan Stanley MS reporting a top-and-bottom line miss in its fourth quarter, which sent shares lower by nearly 6 percent.

What Happened

Morgan Stanley said it earned 80 cents per share in the fourth quarter on revenue of $8.548 billion versus expectations of 92 cents per share on revenue of $9.43 billion. Net income during the quarter improved from $643 million from the same quarter last year to $1.5 billion although this quarter's performance included an intermittent net discrete tax benefit of $111 million and last year's income included a similar benefit of $1 billion.

By segment, Institutional Securities revenue fell from $4.523 billion last year to $3.839 billion, Wealth Management revenue fell from $4.407 billion to $4.144 billion, Investment Management revenue improved from $637 million to $684 million. Morgan Stanley said its firm wide net revenue were negatively impacted by the "volatile global market environment."

Why It's Important

Despite a challenging quarter, Morgan Stanley CEO James Gorman said the bank achieved record revenue and earnings for the full year 2018. The executive also said it generated a return of equity of 11.8 percent and return on tangible equity of 13.5 percent

Gorman added the global environment "remains uncertain" but the bank remains strong and well positioned to continue pursuing growth opportunities.

Shares traded at $42.50, down 4.5 percent at time of publication.

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