Morgan Stanley, whose total earnings of 79 cents a share on revenue of $9.7 billion topped analysts’ estimates of 74 cents, was the last of the largest US banks to announce second-quarter earnings, and results for most didn’t match the blowout performance of the first quarter.
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Net revenue in Morgan Stanley’s fixed income and commodities unit was $1.3 billion in the second quarter, the New York bank reported Monday. In last year’s second quarter, net earnings were 92 cent per share and net revenue was $8.6 billion excluding DVA.
Further, total non-interest revenue of $9.05 billion increased 8% year over year, mainly backed by a rise in trading revenues and other income.
Morgan Stanley no longer breaks out headcount by division, so it’s impossible to tell whether its investment bank has been growing.
Equity sales and trading revenues were $2.3 billion, up from $1.8 billion a year ago. Year-on-year, its fixed income and commodities trading revenues were up 30% in Q2 and for the first half were up by 21%.
Morgan Stanley was the only big bank to report a jump in trading revenue.
Morgan Stanley shares rose over 2% in pre-market trading today and continued the rising trend as markets opened.
“We delivered a strong quarter across each of our businesses”, said Morgan Stanley CEO James Gorman in a statement.
“We’re very comfortable with the business we have and the size of the business”, Mr. Gorman said on the call. Kiltearn Partners Llp is another bull as the active investment manager who is having 3.72 million shares of Morgan Stanley or 7.12% of their portfolio.
The firm reported client assets in fee-based accounts hit $813 billion, increasing 7 percent compared to a year ago.
During the reported quarter, Morgan Stanley bought back around 16 million shares for almost $625 million. During the same quarter a year ago, the company posted $0.60 earnings per share.
Morgan Stanley was the latest company to post stronger than expected quarterly earnings.
Vivint Solar Inc (NYSE: VSLR) shares were also up, gaining 46 percent to $15.83 after the company agreed to be acquired by Sunedison Inc (NASDAQ: SUNE) for $2.2 billion.
Compensation expense and benefits grew 5 percent to $4.41 billion, primarily driven by higher revenues.
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“Given an impressive set of second-quarter results, we expect shares to outperform, with positive consensus revisions likely as well”, said Nomura analyst Steven Chubak. The firm also boosted its profit margin to 23%, well within Mr. Gorman’s target of 22% to 25% by year-end.
