Prior to the US stock market on Tuesday (January 16th), internationally renowned investment bank Morgan Stanley released its performance report for the fourth quarter of 2023.
The financial report shows that this top investment bank recorded a revenue of $12.896 billion in the quarter, stronger than market expectations of $12.75 billion, a year-on-year increase of 1%. However, net profit decreased by 32% year-on-year to $1.517 billion, with an adjusted earnings per share of $0.85, lower than the market expectation of $1.01, compared to $1.26 in the same period last year.
Source: Morgan Stanley website
The report mentions that Morgan Stanley incurred two expenses totaling $535 million in the fourth quarter, resulting in a loss of $0.28 per share.
One of them is a special rated fee charged by the Federal Deposit Insurance Corporation (FDIC) to large banks to recover approximately $15.8 billion in costs incurred in protecting uninsured depositors of Silicon Valley banks and signature banks.
At that time, FDIC stated that banks with total assets exceeding $50 billion would contribute more than 95% of this special fee. The Da Mo report states that expenses related to "special rated fees" reached $286 million.
As for another $249 million expense, the US Securities and Exchange Commission (SEC) also provided an answer last week. On January 12th, it was announced that the SEC accused Morgan Stanley of years of fraud, which involved disclosing confidential information on the sale of a large number of stocks known as "block trades.".
The SEC also accused Morgan Stanley of failing to implement its policy on the misuse of significant non-public information related to bulk trading. Da Mo has agreed to pay over 249 million US dollars to settle the related allegations.
For the whole year of 2023, Morgan Stanley's revenue was $54.143 billion, an increase of less than 1% compared to 2022; The net profit was 9.087 billion US dollars, a significant decrease from the previous year's 11.029 billion US dollars. Compared to that, JPMorgan Chase's annual net profit reached $49.6 billion, which is five times that of Morgan Stanley.
Source: JPMorgan Chase website
Ted Pick, the newly appointed CEO of Damo, wrote, "In 2023, despite the complex market background and a series of unfavorable factors, the company still reported a robust return on equity (ROTCE)."
"At the beginning of 2024, we developed a clear and consistent business strategy and formed a unified leadership team, committed to achieving long-term financial goals and continuing to create value for shareholders."
At the same time, Pique also warned that two "major downside risks" may put pressure on the bank in 2024: firstly, the escalation of geopolitical conflicts; The second is the economic situation in the United States.
"If it's a soft landing, then there's no problem. But if the economy weakens sharply in the coming quarters, the Federal Reserve may be forced to take action, leading to a decline in asset prices and trading activity."
Pique also pointed out that high inflation may continue to pose challenges to consumers and supply chains, and keep the Federal Reserve hawkish for a longer period of time, with correspondingly higher interest rates.
