Thu, Jan. 29, 11:47 AM
- "We certainly recognize all the headwinds, notably on the regulatory capital side, but low-hanging fruit on capital efficiency actions should drive some ROE improvement," says the team of David Trone and Pankaj Chitrakar, and they expect better CCAR outcomes for at least a few of the names (including Citi, one would think) in a few weeks.
- As for operating results, whether they come in good or not so good this year hinges on whether the Fed hikes or not. That forecast sounds a lot like 2014, 2013, and 2012, but the two note the likelihood of higher rates appears far higher this year.
- They maintain Buy ratings on Citigroup (C +0.1%), Morgan Stanley (MS +1%), Goldman Sachs (GS +1%), Bank of America (BAC +0.7%), and JPMorgan (JPM +1.1%), with Citi, Goldman, and Morgan Stanley their top picks.
- Previously: Financials go on sale in January (Jan. 24)
Sat, Jan. 24, 4:48 PM
- The financial sector is off to a worse start to the year than even the energy names, with the XLF down 3.9% YTD vs. the XLE's 3.2% decline. The S&P 500 is roughly flat. The SPDR KBW Bank ETF (NYSEARCA:KBE) is off 7.5%, and the Regional Bank ETF (NYSEARCA:KRE) is lower by 6.9%.
- Q4 earnings results haven't been wonderful, but financial names had been savaged well before those reports started coming out. Instead there's a difficult regulatory regime that won't quit, and - for now - it's looking like "wait'll next year" for the rising interest rates that were supposed to drive profit margins higher. The 10-year/2-year spread - already pretty low at 150 basis points to start the year - has narrowed to 137 bps.
- A partial roll call of banks: Bank of America (NYSE:BAC) -12.1% YTD, Citigroup (NYSE:C) -10.1%, JPMorgan (NYSE:JPM) -9.4%, Morgan Stanley (NYSE:MS) -9.4%, Regions Financial (NYSE:RF) -14.7%, KeyCorp (NYSE:KEY) -4.5%, PNC Financial (NYSE:PNC) -5.4%, Bank of New York (NYSE:BK) -9.1%, Capital One (NYSE:COF) -6%, Discover (NYSE:DFS) -13.6%.
- Other spread-starved sector names: MetLife (NYSE:MET) -9.8%, AIG (NYSE:AIG) -8%, Prudential (NYSE:PRU) -10.8%, Schwab (NYSE:SCHW) -9.9%.
- Some of what's working in financials: Blackstone (NYSE:BX) +6.7%, E*Trade (NASDAQ:ETFC) +1.2%, WisdomTree (NASDAQ:WETF) +12.3%, Legg Mason +2.8%.
Tue, Jan. 20, 7:34 AM
- Excluding DVA, Q4 income from continuing operations of $903M or $0.40 per share vs. $336M and $0.15 one year ago.
- Institutional Securities net revenue excluding DVA of $3.2B vs. $3.7B one year ago, with pretax loss of $1.08B vs. pretax loss of $880M one year ago. Advisory revenues of $488M vs. $451M, thanks to boosted M&A activity. Equity sales and trading revenue of $1.6B vs. $1.5B. FICC revenue (excl.DVA) of $599M vs. $694M (-13.7%).
- Wealth Management revenue of $3.8B vs. $3.7B one year ago, and pretax income of $736M vs. $715M. Asset management fee revenue of $2.1B vs. $2B. Transactional revenues of $976M vs. $1.1B. Net interest income of $625M vs. $526M. Compensation expense of $2.3B vs. $2.1B. Total client assets more than $2T at year's end, with those in fee-based accounts of $785B up 13%. WM reps of $16,076 slips from $16,456.
- Investment Management revenue of $588M vs. $858M one year ago, with pretax loss of $6M vs. profit of $331M.
- Previously: Morgan Stanley misses by $0.08, misses on revenue (Jan. 20)
- MS -2% premarket
Tue, Jan. 20, 7:03 AM
Mon, Jan. 19, 5:30 PM
Thu, Jan. 15, 4:34 PM
- Morgan Stanley (NYSE:MS) promotes 151 employees to managing director, down from 153 in 2014, and against 144 two years ago. Of those promoted, 61% work in the U.S., 13% in Asia, and 26% in EMEA.
- About half of the new MDs work in investment banking, sales, or trading, a lower proportion than in the past as wealth management makes up a greater share of the bank's operations.
- Morgan reports its Q4 results before the bell on Tuesday.
Wed, Jan. 14, 3:22 PM
- One current co-head, Simon Greenshields - after 31 years with Morgan Stanley (MS -2.2%) - is exiting the bank, and the other, Colin Bryce, is looking to move into a senior advisory role, reports the WSJ. They'll be replaced with Nancy King - who most recently was in charge of oil - and natural gas specialist Peter Sherk.
- The changes come amid big change in commodities at Morgan Stanley and the rest of Wall Street, with most of the large investment banks, including Morgan, looking to scale back physical commodities business in favor of financial derivatives tied to the sector.
Wed, Jan. 14, 12:17 PM
- There could be downside risk to Goldman Sachs (GS -2.7%) and Morgan Stanley (MS -2.7%) numbers, warns Credit Suisse's Christian Bolu, noting FICC revenue at JPMorgan of $2.5B missed his estimate by about $200M.
- JPM management suggested performance was weaker in credit and securitized products, but forex and emerging markets saw strength, and Bolu notes Goldman's and Morgan Stanley's trading arms tend to be skewed more towards credit and less toward currencies and emerging markets.
- On the other hand, says the team at KBW, JPMorgan's stock trading results were good, which should be a positive for Morgan Stanley and Goldman, given their focus on equities. KBW suggests investors focus on investment banking results overall, rather than get too mired in the unit's various components.
Mon, Jan. 12, 2:51 PM
- "We now see less room for multiple expansion," says JMP's Devin Ryan on his downgrade of Morgan Stanley (MS -1.4%) to Market Perform from Market Outperform. The stock was the team's top pick in 2014, but Ryan notes gains of 25%, 65%, and 28% makes three straight years of significant outperformance.
- The stock's now trading at about 12x the team's 2015 estimates and 1.2x the forward book value estimate.
- Ryan does see opportunity elsewhere, though, particularly E*Trade (ETFC -1.5%) in the retail brokerage sector as earnings growth remains elevated, and Lazard (LAZ -1.2%) in the bulge bracket investment bank area as the M&A cycle still has room to run.
- 2015 is shaping up to be better than 2014 for alternative investment managers as well, says Ryan, naming Fortress Investment Group (FIG -2.2%) and KKR (KKR -2.1%) as top picks.
- Previously: JMP Securities: Time to ring the register on Morgan Stanley (Jan. 12)
Mon, Jan. 12, 8:06 AM| 2 Comments
Thu, Jan. 8, 12:24 PM
- Despite new regulations limiting its participation in such funds, Morgan Stanley (MS +1.3%) has raised about $1B for Morgan Stanley Credit Partners II, a private-equity type credit fund.
- The first fund closed in 2011 and was about the same size. The bank began raising money for this new fund 15 months ago.
- The strategy of both funds is the same: Making loans and buying the existing debt of companies in North America and Western Europe with EBITDA of more than $15M.
- Morgan is pushing ahead with private equity even as competitors have pulled back or exited completely thanks to the Volcker Rule. The bank is also raising a $4B global infrastructure fund, a $2.5B global real estate fund, and another global P-E fund of unknown size.
Mon, Jan. 5, 4:41 PM
- A deal for the sale of Montreal Gateway Terminals Partnership - a cargo container facility at the Port of Montreal - to a consortium led by Fiera Axium Infrastructure for more than $600M should be announced later this month, reports the WSJ.
- The Journal several months ago reported MGT had been put on the block.
- This facility has been profitable since Morgan Stanley (NYSE:MS) first acquired a stake in 2007, but others haven't fared as well, making financing for acquisitions tough to come by, and the buyer group is reportedly paying just 16-17x EBITDA vs. a 27x multiple for last year's sale of Australia's Newcastle Port.
Mon, Jan. 5, 11:13 AM
- A now former Morgan Stanley (MS -3.2%) employee stole partial client data on up to 10% of all Wealth Management clients, and certain account information of roughly 900 clients - including account names and numbers - was briefly posted on the Internet. The stolen data does not include passwords or social security numbers.
- The exposure was quickly detected by Morgan, and removed.
- Source: Press Release
Dec. 30, 2014, 11:11 AM
- Having scored tens of billions from other banks over bubble-era mortgages, the DOJ now has Morgan Stanley (MS -0.4%) in its sights, and unearthed documents/emails from an unrelated case perhaps show an even closer relationship between the bank and subprime king New Century than previously imagined.
- “Morgan Stanley is involved in almost every strategic decision that New Century makes in securitized products,” according to one internal Morgan Stanley report from 2004 that the bank surely doesn't want to see put in front of a jury.
- For its part, Morgan Stanley says it was competing for New Century loans with other banks and did not have any special leverage over the lender, and other documents indicate Morgan was stricter than some competitors in deciding which loans to accept.
- Source: NYT
Dec. 22, 2014, 9:15 AM
- Rosneft (OTC:RNFTF) says Morgan Stanley's (NYSE:MS) sale of its global oil merchanting business to Rosneft has been terminated due to likely regulatory refusal.
- Rosneft says the companies will continue to work together in other areas, while MS says it will seek other buyers for the unit.
- The oil merchanting unit includes MS's physical oil inventory and related purchase, sale and supply agreements, as well as oil terminal storage agreements and a 49% stake in a company which manages ~100 oil and chemical tankers.
Dec. 17, 2014, 2:24 PM
- Unlike previous stock sales by the U.K. government, Morgan Stanley (NYSE:MS) is charging a fee of just £1 to handle the affair.
- The bank has a six-month window to sell no more than 15% of the average volume of Lloyds, meaning somewhere in the area of about £3B of stock being sold by the end of June.
- Charity? Not exactly. There's something called order flow, and Morgan Stanley will be allowed to charge commissions to investors when the shares are sold. Morgan was chosen for the work because of the job it did leading the sale of 7.7B Citigroup shares by the U.S. in 2010.
- Previously: U.K. readies next sales of Lloyds stake (Dec. 17, 2014)
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