Morgan Stanley's 4th-quarter earnings beat estimates as annual revenues hit record high despite economic gloom

• Morgan Stanley beat expectations as net income rose to $3.39 billion in the fourth quarter.
• The bank's trading section thrived as markets recovered, helping annual revenues hit a record.
• Chief executive James Gorman said Morgan Stanley enters 2021 with "significant momentum".

Morgan Stanley's fourth-quarter earnings beat expectations as strong performances by its trading and investment arms pushed annual revenue to a record high.

The Wall Street lender brought in a profit of $3.39 billion in the fourth quarter, up 51% from a year earlier. Earnings per share rose to $1.81 in the final three months of the year, up from $1.30 in 2019 and beating expectations of $1.27.

Revenues rose 26% year on year to $13.64 billion in the fourth quarter, the bank said, helping revenues for the year as a whole hit a record high of $48.2 billion. Morgan Stanley shares were up 1.96% in pre-market trading. "The firm produced a very strong quarter and record full-year results, with excellent performance across all three businesses and geographies," chairman and chief executive James Gorman said.

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Revenues at Morgan Stanley's institutional securities arm - which includes its investment banking and trading businesses - jumped 39% year on year to $7 billion in the fourth quarter.

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Here are the key numbers:

• Earnings per share: $1.81 versus $1.27 estimated
• Revenues: $13.64 billion versus $11.54 billion estimated
• Equities trading revenue: $2.5 billion versus $2.14 billion estimated

Volatile markets and a rebound in mergers and listings have fuelled a reversal in Wall Street's fortunes since the spring of 2020. In March and April last year, bank shares plunged as coronavirus took hold, closing much of the economy and causing the Federal Reserve to slash interest rates.

Yet the US's biggest lenders have bounced back remarkably quickly as monetary and fiscal stimulus has caused markets to surge to fresh highs.

Those with the biggest trading businesses, such as Morgan Stanley, JPMorgan and Goldman Sachs, have fared particularly well.

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Morgan Stanley's equities trading revenue jumped 30% year on year to $2.5 billion in the final three months of the year. Meanwhile investment banking revenues, which include advisory and underwriting, surged 46% to $2.3 billion.

"We enter 2021 with significant momentum, and I am very confident in our competitive position and our opportunities for continued growth," Gorman said in a statement released with the earnings.

Morgan Stanley confirmed that it planned to buy back up to $10 billion of its own shares in 2021, after the Fed eased restrictions on repurchases. The lender finalized its $13 billion purchase of online trading platform E-Trade in October 2020.