Morgan Stanley revenue beats on dealmaking rebound, takes $535m in charges

NEW YORK: Morgan Stanley’s revenue beat fourth-quarter expectations on Tuesday, helped by a rebound in dealmaking activity, sending the shares of the investment bank up 1% in premarket trading.

Several high-profile initial public offerings and merger announcements toward the end of last year sparked optimism about a nascent recovery in dealmaking in 2024.

“We begin 2024 with a clear and consistent business strategy and a unified leadership team,” CEO Ted Pick said in a statement. “We are focused on achieving our long-term financial goals and continuing to deliver for shareholders.” Morgan Stanley is among the banking giants that are paying special fees to replenish a government deposit insurance fund that was drained by almost $16 billion after the collapse of two regional lenders last year.

It took a combined $535 million in charges, which included $286 million in special assessment fee to the regulator and $249 million in legal charges.

Morgan Stanley’s investment banking revenue rose 5% in the fourth quarter from a year ago, outperforming the broader industry.

Net revenue came in at $12.9 billion compared with analysts’ expectations of $12.75 billion, according to LSEG data.

Its net income fell to $1.5 billion, or 85 cents per diluted share, in the three months ended Dec. 31, compared with $2.2 billion, or $1.26 per diluted share, a year ago.

The gain in investment banking driven by M&A advisory was “encouraging,” wrote Chris Kotowski, an analyst at brokerage Oppenheimer.