Morgan Stanley reports a drop in Q1 profit but still beats estimates thanks to strong trading revenue

• Morgan Stanley reported first-quarter earnings on Thursday that beat analyst expectations.
• Quarterly revenue came in at $14.8 billion, topping estimates of $14.2 billion.

Morgan Stanley on Thursday posted first-quarter earnings that showed a decline in quarterly profit, but that beat analyst expectations, driven by a strong performance in its equities trading division and higher asset management fees.

Here are the key numbers:

• Quarterly revenue: $14.8 billion vs. $14.2 billion prediction from analysts polled by Bloomberg
• Diluted earnings per share: $2.02 vs. $1.69 analyst consensus and vs $2.19 in Q1 2021.
• Net income: $3.7 billion vs. $3 billion analyst consensus

Morgan Stanley rose 2.6% in Thursday's pre-market to $86.39 a share, but is down 14.2% so far this year.

"Institutional securities navigated volatility on behalf of clients extraordinarily well, wealth management's margin proved resilient and the business added $142 billion net new assets in the quarter, and Investment Management benefited from its diversification," CEO James Gorman said in a statement.

In the first quarter, Wall Street banks have been facing headwinds from Russia's invasion of Ukraine, which resulted in turbulent equity markets and pushed companies into delaying or holding off on stock market listings or merger-related deals.

Morgan Stanley's overall quarterly revenue came in at $14.8 billion, compared to $15.7 billion in the same period last year. Equity trading revenue stood at $3.2 billion, higher than StreetAccount's expectation for $2.7 billion.

It posted fixed-income revenue of $2.9 billion in the quarter, above estimates of $2.2 billion.

Revenue for the institutional securities segment, which refers to trading management of high net worth clients, came in at $7.7 billion, compared to $8.6 billion last year.

The bank said investment banking revenues fell 37% year-on-year due to lower underwriting services in an uncertain market environment.

The wealth management fared in line with last year's performance, bringing in net revenue of $5.9 billion for the quarter.

Morgan Stanley repurchased $2.9 billion of its outstanding common stock under its share repurchase program, and announced a $0.70 quarterly dividend.

JPMorgan kicked off the earnings season by reporting first-quarter results Wednesday, with managed revenue down 4.6% year-on-year to $31.59 billion.

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