Morgan Stanley reported profit and revenue below analysts’ expectations as whipsawing markets late last year took a toll on the bank’s two biggest businesses. Shares fell in early trading.

The bank posted profit of 80 cents per share, below the 89 cent average estimate of analysts surveyed by Refinitiv. Companywide revenue declined 10 percent to $8.55 billion, compared with the $9.3 billion estimate.

The firm’s institutional securities business, which contains its trading and advisory units, posted $3.84 billion in revenue, nearly $500 million below the $4.33 billion estimate. The bank’s wealth management division posted $4.14 billion in revenue, compared to the $4.45 billion estimate. Only the bank’s smallest division, investment management, exceeded estimates, producing $684 million in revenue, compared to the $656.7 million estimate.

“This is not Morgan Stanley’s finest hour,” said Octavio Marenzi, CEO of capital markets consultancy Opimas. “In wealth management, Morgan Stanley’s revenues were down 6%, while competing firms were able to eke out single-digit growth. In equities trading, Morgan Stanley was even further behind the competition, with flat revenues where other investment banks were able to benefit from market volatility and show double-digit growth.”

Morgan Stanley shares slumped 5.8 percent to $41.90 in early Thursday trading.

Under Chief Executive Officer James Gorman, Morgan Stanley has built out its wealth management division, a steadier business than its trading operations.

In theory, the increased emphasis on wealth management should help it weather a decline in trading revenue amid turbulent markets late last year. Every major Wall Street bank to post results so far has booked declines of at least 16 percent in fixed income revenue for the fourth quarter as clients stepped away amid sharp movements in asset classes around the world.

“In 2018 we achieved record revenues and earnings, and growth across each of our business segments – despite a challenging fourth quarter,” Gorman said in the earnings statement. “While the global environment remains uncertain, our franchise is strong and we are well positioned to pursue growth opportunities and serve our clients.”

Morgan Stanley also updated its strategic goals, giving investors guidance on performance metrics for 2019. During last year’s review, Gorman said that the bank could earn returns on average common equity of 10 to 13 percent, expand its market share in investment banking and trading and boost wealth management profit margins to 26 to 28 percent.

Shares of Morgan Stanley fell 24 percent last year, worse than the 20 percent decline of the KBW Bank Index.

Here’s what Wall Street expected:

  • Earnings: 89 cents per share, according to Refinitiv.
  • Revenue: $9.295 billion.
  • Wealth management: $4.45 billion revenue, according to FactSet
  • Trading: Equities: $2.04 billion. Fixed income: $800 million.

Originally published at CNBC

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