Morgan Stanley swings to profit in 4Q, beating expectations

In addition, Morgan Stanley had taken around $2.9 billion in after-tax legal expenses and a charge amounting to $781 million related to compensation adjustments during the same quarter in the previous year.

Morgan Stanley stock is now trading at $25.97 (as of 1/15/2016 4:00pm EST).

Morgan Stanley’s revenue was $7.74 billion compared with $7.76 billion the year before.

“We enter 2016 with a continued focus on managing expenses across the firm and driving up returns for our shareholders”, Chief Executive James Gorman said in a statement. Compensation costs fell 28.5 percent.

Morgan Stanley reduced the size of its fixed-income currency and commodities segment earlier this 2016. For the same quarter past year (Q4 2014), the company had posted a positive EPS of $0.40 on revenue of $7.76 billion. Shufro Rose & Company now owns 11,600 shares of the financial services provider’s stock valued at $368,000 after buying an additional 500 shares during the period.

Lower costs and much smaller legal bills helped Citigroup Inc and JPMorgan Chase & Co report a rise in quarterly profit last week.

As its trading business suffers, the bank has been focusing on its less volatile wealth management unit, which accounted for almost half of its revenue in 2015.

Revenue from wealth management slipped 1.4 percent to $3.75 billion. It is believed that this strength will continue in the coming years and that the strong points outweigh the fact that Morgan Stanley has had a disappointing stock performance recently.

Today’s results suggest that Morgan Stanley’s traders – in both equities and fixed income – are the best among the banks that have reported so far. “We should see some rebound as we go into the first half of 2016”, Viking Sparks analyst Marty Mosby said. This was above the market forecast of Earnings Per Share of $0.33 on revenue of $7.59 billion for Q4 2015, according to Zacks Investment Research.

Earnings per share excluding so-called debt valuation adjustments came in at 43 cents, ahead of the 32 cents which analysts had been anticipating.

Shares of the company have fallen over 12% the last 12 months amidst the concern the most recent downturn in revenue from trading would weigh on the profits of Morgan Stanley.

“They’re looking at the environment and have determined that they can’t get enough returns for shareholders through significant increases in banking or massive increases in assets under management”, said Ryan Kelley, a portfolio manager at Hennessy Funds and a Morgan Stanley shareholder.