The big U.S. banks are among the first companies to report their results each earnings season, and we've now kicked off fourth-quarter 2019 earnings season with a flurry of bank reports. Some have been impressive, but none have produced the "wow" factor Morgan Stanley's (MS 0.81%) report did.

Shortly after management released the fourth-quarter and full-year 2019 results, Morgan Stanley's stock price had risen by more than 6% -- a large move as far as bank stocks go. Here's what investors need to know about Morgan Stanley's latest results and why the market is reacting in such a positive way.

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Positive surprises on the top and bottom lines

While they don't provide the total picture of how a company did, it's important to take a look at the top-line revenue and bottom-line earnings figures to get a general sense of how the quarter went.

To put it mildly, Morgan Stanley demolished expectations on both sides. The bank's revenue came in at $10.86 billion, 27% higher than the same quarter a year ago and more than $1 billion higher than analysts had been expecting.

On the bottom line, earnings of $1.30 per share were dramatically higher than the $0.99 that analysts were looking for and 63% higher than the $0.80 in per-share earnings the bank produced in the same quarter a year ago.

Morgan Stanley's numbers look impressive all around

Digging a little deeper, there is little (if anything) to be disappointed about in Morgan Stanley's fourth quarter. Just to name some of the key highlights investors should pay attention to:

  • Like with the other banks we've heard from so far, bond trading was a big positive surprise. Analysts expected this revenue to rise, but not by as much as it did. Morgan Stanley's bond trading revenue came in 36% higher than expected and was a staggering 126% higher than it was in the fourth quarter last year.
  • Wealth management revenue grew 11% over the past year, fueled mainly by strong market performance but also by positive inflows of investor capital.
  • Morgan Stanley's investment management division produced $1.36 billion in revenue, and while it's the smallest of the bank's divisions, this represents 98% growth over what it generated in the fourth quarter of 2018.
  • Morgan Stanley generated a return on equity (ROE) of 11.7% for the year, down slightly from 11.8% in 2018, but this is a much milder drop than most other banks saw in the face of a challenging falling-rate environment.

Big plans

There's another catalyst helping to fuel the post-earnings optimism around Morgan Stanley. Along with its earnings report, the bank released a strategic update presentation that contained some pretty ambitious targets.

To name just a few things, Morgan Stanley aims to increase its return on tangible common equity (ROTCE) to 13% to 15% within the next two years and 15% to 17% over the longer term (12.9% in 2019), as well as to significantly improve its efficiency and margins.

The winner of big bank earnings

Now that Morgan Stanley has reported its results, we've heard from the six largest U.S. banks. Some certainly produced impressive results, like JPMorgan Chase (JPM 0.50%)'s earnings, while others like Wells Fargo (WFC 0.92%) left a lot to be desired. However, Morgan Stanley's all-around excellent performance and the virtual absence of disappointing figures makes the bank the clear winner of fourth-quarter big bank earnings.