said Wednesday that profit rose 9% in the fourth quarter to $3.7 billion.
The bank earned $2.01 per share. Analysts expected $1.94 a share, according to FactSet. Revenue rose 7% to $14.5 billion in the quarter, which fell just short of expectations.
The bank earned record profit for the full year. Wealthy clients flocked to the bank for help managing their money, and the market for deals on Wall Street stayed hot.
Investment banking revenue grew 6% in the fourth quarter. Rivals
Goldman Sachs Group Inc.,
& Co. and
Citigroup Inc.
also reported gains in investment banking.
Stock and bond trading revenue fell 6% in the fourth quarter. Trading revenue also fell at Goldman, JPMorgan and Citigroup.
Morgan Stanley shares rose about 2% in morning trading.
Windfall trading revenues across Wall Street are slowing down as market volatility subsides. Banks are being forced to offer bigger paydays to get and keep employees in a tight labor market. Goldman, JPMorgan and Citigroup all reported a drop in fourth-quarter profits, ending a streak of big gains.
Full-year compensation expenses at Morgan Stanley rose 18% to $24.6 billion. Banks increased salaries for junior bankers across Wall Street in 2021, and firms are also paying up to keep senior executives. “We feel good that we’ve paid for performance,” Morgan Stanley Chief Financial Officer
Sharon Yeshaya
said.
JPMorgan Chief Executive
Jamie Dimon
said last week that his bank would remain competitive in compensating its traders and bankers, even if it pressured profit margins.
Fourth-quarter revenue from Morgan Stanley’s wealth management division grew 10% from a year earlier. The unit’s net interest income, a measure of its lending profitability, grew 16%. That growth could continue in the year ahead, since the Federal Reserve has signaled that several interest rate increases are likely in 2022.
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The number of retail-trading clients at Morgan Stanley was 7.4 million, in line with the third quarter total. The average daily number of retail trades the company handled for the quarter topped 1 million, but was down 6% from a year ago.
Investment management revenue rose 59% from a year earlier. That rate was boosted by Morgan Stanley’s acquisition of Eaton Vance, which closed last March.
Write to Charley Grant at charles.grant@wsj.com
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