Morgan Stanley tops estimates on underwriting, wealth management

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Morgan Stanley lifted that target to 26 percent to 28 percent for this year and next.

Like other banks, Morgan Stanley had to write down the value of its deferred tax assets, which are effectively tax credits the bank stockpiled after the financial crisis. The loss still came in below Wall Street estimates.

Morgan Stanley eclipsed Goldman Sachs as Wall Street's most highly valued investment bank as it reported better than expected quarterly results. Analysts on average were looking for 77 cents per share, according to Thomson Reuters I/B/E/S. Investment banking revenue ticked up to $1.4 billion from $1.3 billion in the year-ago quarter. This includes a net discrete tax provision of $990 million, which is made up of a $1.2 billion net discrete tax provision. This is up from its revenue of $9.02 billion from the same period of the year prior.

Morgan Stanley's one-time $1.2 billion tax provision, however, was the smallest. Unlike stock trading and advisory fees, wealth management is a steady business where Morgan Stanley can earn fees on the assets it has under management for its roughly 3.5 million customers.

Morgan Stanley's tax adjustment payment totalled just under $1.0 billion, once the tax change benefits were also factored in.

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"In 2017, pre-tax earnings grew by 18%, driven by a 10% increase in revenues, with growth across all our business segments", Chairman and CEO James Gorman said in a statement on the Morgan Stanley Q4 2017 earnings results.

Morgan Stanley's institutional securities revenues fell to $4.5 billion from $4.6 billion in the year-ago quarter. Wealth management bested its goal of a pretax margin between 23 percent and 25 percent, thanks in part to a compensation ratio that met its targeted level of 56 percent.

It unveiled a fourth-quarter profit despite taking a $1.2 billion charge linked to the new United States tax law and suffering a plunge in trading revenue.

Excluding the tax charge, its return on equity was 9.4 percent past year.

Morgan Stanley (NYSE:MS)'s EPS growth this year is 0.20% and the trailing 12-month EPS is $3.62.