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 USA banks to announce second-quarter earnings, and results for most didn’t match the blowout performance of the first quarter.
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Overall, the firm earned $1.8 billion in profits, or 85 cents a share, down from $1.9 billion a year earlier.
Companies reporting earnings on Monday include IBM.
The bank also increased dividends last quarter, from $0.10 per share to $0.15 per share.
Quarterly revenues at institutional securities segment rose 22 percent from the year-ago quarter to $5.17 billion.
In response, Morgan Stanley’s chief executive officer, James Gorman, said that while he could not discuss the possibility of any deals, he was “comfortable” with the size of the business and that he saw more opportunity to grow organically, particularly through added emphasis on banking, which has been a growing force in wealth management as advisers sell more loans. Average annualized revenue per representative (or fees and commissions) were $978,000, up 8% compared with the prior-year quarter. The net money flow for the block transaction was $(-0.32) million.
As of Jun 30, 2015, total assets under management or supervision were $403 billion, up 1% year over year.
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.
Equities is comparatively low margin, so when rivals like Goldman Sachs posted a massive 63% year on year increase in Q2, this is was deemed less impressive than sustaining the “engine room” of profits in fixed income. “What we’ve said is the strategy isn’t changing”. Bank of America Merrill Lynch, which began turning around its outflows past year, said it had added 187 advisers last quarter for a total of 14,370. “We are really and truly at scale”. “So we feel good about that”.
Consolidated net revenue rose 13 percent to United States dollars 9.74 billion, with wealth management revenue increasing 4.7 percent to United States dollars 3.88 billion. Compensation and benefits expenses were US$4.41 billion, up 5 per cent from US$4.2 billion a year ago. $813 billion at quarter end, representing 40% of client assets.
Last quarter, Morgan Stanley handily beat earnings expectations amid higher revenue from trading bonds and equities.
Net interest income of $737 million increased from $577 million a year ago on higher deposit and loan balances. This is a loss of 144 advisors from the previous quarter and down 545 advisors reported with the firm a year ago.
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What could influence such costs going forward, an equity analyst asked, and is recruiting so aggressive that it is driving them up?
