Morgan Stanley’s Weak Quarter Bodes Poorly for Full Year


Morgan Stanley is already waiting for this year’s Godot.

The Wall Street firm earned $1.1 billion in the first three months of the year. That beat estimates, but it amounts to an annualized return on equity of just 6.2 percent. It’s well short of the 10 percent target that the bank’s chief executive, James P. Gorman, set long ago but still has not managed to hit with any full year’s earnings. Given the first-quarter showing, he’s unlikely to get there in 2016, either.

The three months through March are usually the best of the year for investment banks. Morgan Stanley, for example, made almost a third of its net income in the same period last year. It’s usually when fixed-income trading performs well, too. The less that capital-intensive business brings in, the harder it is likely be to make up returns over the following nine months. Mr. Gorman’s traders pulled in just $839 million in the first quarter, a 59 percent drop from the same period a year earlier – and the weakest performance so far for any of the big banks…

Morgan Stanley’s Weak Quarter Bodes Poorly for Full Year

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