Morgan Stanley's revenue narrowly beat analysts' expectations on a wealth-management record even as the firm's traders fell short of estimates.
Wealth management, where Morgan Stanley benefited from higher net interest income as a result of rising rates, reported revenue of $6.62 billion, up 5.9% from a year earlier.
The New York-based firm's trading operation posted $3.6 billion in fourth-quarter revenue, worse than the $4.07 billion analysts had forecast.
The bank, which now leans on its wealth- and asset-management business for more than half its revenue, saw assets in the unit rose from the third quarter to $4.19 trillion. Morgan Stanley has a target of $1 trillion in net new assets in wealth management every three years, and a longer term goal of $10 trillion in client assets.
"We have seen a healthy start to the year," Chief Financial Officer Sharon Yeshaya said in an interview. "A lot of it hinges on the economic outlook and whether we have seen a peak in inflation and a policy pivot."
Morgan Stanley executives have been preaching confidence heading into 2023 in the hopes that their business model will avoid getting caught up in any consumer-market strain, while a rebound in asset prices and capital-markets activity would prove a boon for the firm.
The firm's shares surged 7.08% to $97.89 at 2:38 p.m. in New York. They had dropped 7.3% in the 12 months through Friday.
Morgan Stanley's trading results were hurt by equity trading, with a 24% drop in revenue to $2.18 billion. The trading disappointment added to the troubles suffered by Morgan Stanley's dealmakers, who struggled throughout the year to recapture their 2021 performance.
Revenue from equity underwriting slumped 73% to $227 million, while debt underwriting declined 38% to $314 million. Merger bankers also fell behind, with advisory revenue dropping 34%.
The bank's investment-management arm posted $1.46 billion in revenue, down 17%.
