Morgan Stanley posts $9.02 billion in revenue and $0.81 EPS
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The jury is out on banking stocks. On the one hand, the consensus is that we are entering an era of rising interest rates, what with the Fed having raised the federal funds rate by 25-basis points on December 14, 2016. Higher interest rates go hand-in-hand with increased profitability for banks and financial institutions. The recent quarterly performance of Morgan Stanley (MS) has not factored the latest rate hike into account, and yet the bank’s profitability has surged. On Tuesday, 17 January 2017, Morgan Stanley released its quarterly earnings reports, and the actual figures bested forecasts by a long margin. The Chief Financial Officer of the company, Mr. Jon Pruzan expressed significant optimism about the bank’s current performance.
What Macroeconomic Issues Work in Morgan Stanley’s Favour?
Now that the Trump administration is firmly in place, we can expect the next 100 days to be packed with a cavalcade of economic incentives for the corporate sector. These include the vaunted corporate tax cut to 15% (Speaker of the House Paul Ryan believes that 20% is more realistic), deregulation of the financial industry and the corporate sector in general, an America First policy, and repatriation of foreign income earned by American companies. These are but a handful of the issues that are likely to take centre stage in 2017. President Trump will be hard at work signing executive orders from day one, and many big banks are hoping that Trump will put policies in place that will help banks generate higher revenues and keep more of their profits. The numbers speak for themselves: Morgan Stanley increased its revenue from trading and bond sales to $1.5 billion, from just $550 million in 2016. Add in trading net revenues and total sales, and the figure increases to $3.2 billion – that’s a 39% increase for Morgan Stanley.
