At least 19 teams managing some $3.8 billion in assets left the firm in the second quarter, according to InvestmentNews’ Advisers on the Move database. On a per-share basis, that amounted to 85 cents, compared with 92 cents in the same period previous year, when a one-time tax benefit boosted results.
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Consolidated net revenue rose 13 percent to Dollars 9.74 billion, with wealth management revenue increasing 4.7 percent to Dollars 3.88 billion.
Morgan Stanley reported the only increase in bond trading among the biggest USA banks and posted record profit in its wealth-management unit for the fourth time in five quarters.
Fixed income & commodities sales and trading net revenues surged 30% to $1.3 billion from $1 billion a year ago.
The rise tallies favorably against a fall of 6% of Goldman Sachs Group Inc’s (NYSE:GS) trading revenues in the second quarter.
Shares in Morgan Stanley were up 3.9% in pre-market trading.
“We delivered a strong quarter across each of our businesses, through client-focused execution, expense discipline and prudent risk management”, said James P. Gorman, chairman and CEO of Morgan Stanley. A majority of the increase was generated due to stronger trading performance.
“The stability of our fee-based businesses gives us comfort that a large portion of business offers us a more predictable outlook”, Gorman said on a call with analysts on Monday.
Morgan Stanley’s compensation to net revenue ratio for the reported quarter was 45% versus 49% in the year-ago quarter.
On average, 25 analysts polled by Thomson Reuters expected the company to report earnings of $0.74 per share for the quarter.
Net income in the quarter jumped 5.2% to $41.8 million or 33 cents per diluted share compared to $33.5 million or 26 cents from the same quarter a year ago.
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. As of December 31, 2011, the Company’s Global Wealth Management Group had:79,649 billion in client assets.
Both adjusted earnings per share and quarterly revenues topped analysts’ expectations.
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“We believe shedding of non-core business is likely to improve the company’s profitability in the long run”, said Zacks Equity Research in late June as it predicted higher earnings for the investment bank following its restructuring efforts. This is a loss of 144 advisors from the previous quarter and down 545 advisors reported with the firm a year ago.
