Morgan Stanley reports modest recovery in investment banking

Morgan Stanley's investment banking business returns to profit after major litigation costs in 2014.

Morgan Stanley has seen growth in its investment banking business in 2015, though its fixed income and commodities sales have suffered.

In its full-year results statement today, Morgan Stanley announced revenue of $7.74 billion in Q4 2015, down from $7.76 billion in the previous year. But net income increased from a loss of $1.63 billion in Q4 2014 to $908 million in the final three months of 2015.

For 2015 as a whole, revenue increased slightly from $34.27 billion in 2014 to $35.15 billion last year. However, as a result of legal costs incurred in 2014, pre-tax profits in 2015 almost doubled to $6.13 billion.

The firm’s institutional securities business reported a slight decrease in net revenue in Q4 2015 of $3.42 billion, down from $3.43 billion in the same quarter of 2014. However, while the final quarter of 2014 saw huge losses of $3.6 billion, largely on the back of litigation costs of $3.1 billion, Q4 2015 was profitable with pre-tax income of $584 million.

Equity sales were healthy with net revenues of $1.8 billion, up from $1.6 billion a year earlier. Its advisory business also benefited from increased M&A activity, increasing revenue from $516 million to $488 million over the period. However equity underwriting revenues were static and fixed income underwriting fell substantially from $462 million in Q4 2014 to $346 million in Q4 2015.

The bank’s Fixed Income & Commodities division – which hit the news at the beginning of this year after several senior figures departed the department as part of major job cuts set to total 1,200 worldwide – saw an expected drop in performance. Sales fell from $599 million to $550 million, which the bank said reflected challenging market conditions.