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Morgan Stanley expected to shine

Friday, January 16, 2015 - 02:21

Analysts see Morgan Stanley performing better than rivals when the bank reports fourth-quarter results on Tuesday. Leah Duncan reports.

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Goldman Sachs, the last of the big banks reporting results for the week. While profit and revenue topped estimates, investors were not impressed. UBS analyst Brennan Hawken: SOUNDBITE: BRENNAN HAWKEN, ANALYST, UBS (ENGLISH) SAYING: "The thing is is that analysts and investors have become quite accustomed with Goldman Sachs beating expectations by pretty hefty margins. So an in-line quarter for Goldman, a lot of investors read as a miss." Revenue from Fixed-Income Currencies and Commodities (FICC) dropped 29 percent in the quarter- following Bank of America, Citigroup and JPMorgan which also saw declines. Several factors led to the drop at Goldman including a difficult market environment. SOUNDBITE: BRENNAN HAWKEN, ANALYST, UBS (ENGLISH) SAYING: "Both in October and December you had credit spreads widening out rather substantially. Throughout the entire quarter you had oil and other commodity markets declining on a strengthening dollar. There was an uptick in FX volatility which was a bit more benign and helpful. But still an impacting factor." But Reuters Breakingviews Columnist Antony Currie says Goldman is doing a better job for shareholders than its rivals. ANTONY CURRIE, REUTERS BREAKINGVIEWS COLUMNIST (ENGLISH) SAYING: "It's worked out how to manage its pay its revenue to give shareholders a bit more of a share of what its earning. Goldman has actually managed to keep its compensation relatively flat. It helps that its revenues are relatively flat. But what they have done is they have gradually ticked up their return on equity." Morgan Stanley is set to report results on Tuesday and analysts see the bank bucking the trend. It's wealth management business is also expected to show strength. SOUNDBITE: BRENNAN HAWKEN, ANALYST, UBS (ENGLISH) SAYING: "What we've seen so far from the four banks that have reported is that equities results have held up far better than FICC. Morgan Stanley is the only U.S. bulge bracket bank that has a larger equities business than its FICC business. We expect that the market environment will be more flattering to Morgan Stanley than for the rest." Hawken says Morgan Stanley looks very attractive and next week's results could be a positive catalyst for the stock.