Covid-19 volatility boosts profits at investment bank Morgan Stanley, echoing rival Goldman Sachs
Morgan Stanley’s profits surged in the fourth quarter, blowing past estimates as the Wall Street bank’s trading business benefited from Covid-19-induced volatility in financial markets.
Shares were up more than 2.4 per cent as US markets opened, ahead of today’s inauguration of Joe Biden as the 46th US President.
The Wall Street investment bank today also confirmed plans to buy back $10bn of shares this year, more than three times the figures announced by its retail banking peers, as it wrapped up results for US lenders, which pointed to a modest rebound in the economy.
While profits from JPMorgan, Bank of America and Wells Fargo have all suffered from the fallout of the crisis for Main Street, Wall Street’s big investment banks have had to make only minimal allowance for a coming wave of mortgage and consumer loan defaults.
Net profit for the three months to 31 December was $3.27bn, soaring from $2.1bn for the same time a year ago.
High trading volumes during the quarter, stemming from the U.S. elections and the release of coronavirus vaccines, benefited Morgan Stanley’s trading unit, which is housed within the institutional securities business.
The bank’s revenue from sales and trading rose to $4.22bn (£3.09bn) from $3.19bn.
Net revenue rose to $13.64bn in the quarter, from $10.86bn last year, while revenue from the company’s investment banking division rose to $2.30bn from $1.58bn.