Morgan Stanley’s second-quarter results topped Wall Street’s expectations Monday, as the investment bank’s trading and wealth management businesses helped lift revenue.
Advertisement
The five big Wall Street banks – excluding Wells Fargo Corp (WFC.N), which does not have a large investment banking business – reported total net earnings of $24.1 billion in the quarter, up $6.7 billion from the same quarter past year.
Overall revenues at the bank rose to $9.7bn in the period, against $8.6bn a year ago.
Morgan Stanley is coming off a strong first quarter in which Chief Executive James Gorman’s strategy of de-emphasizing risky businesses like bond trading and bulking up more consistent ones like wealth management bore fruit. Net revenue was $5.17 billion, up 22% from the year-ago quarter.
Within trading, revenue from bonds, foreign exchange and commodities climbed 30 per cent to US$1.38 billion and revenue from equities jumped 28 per cent to US$2.34 billion.
Profit in Morgan Stanley’s wealth management arm before taxes was US$885 million, up 16 per cent from the US$763 million it reported a year ago.
Shares surged more than 3% in pre-market trading.
Total investment banking revenues were $US1.44 billion, barely changed from $US1.43 billion in the same quarter previous year. 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 lost 144 advisers in the past quarter alone, according to its second-quarter earnings report released Monday.
On average, 25 analysts polled by Thomson Reuters expected the company to report earnings of $0.74 per share for the quarter.
Optimism about the United States economic outlook has led Morgan Stanley’s chief United States strategist Adam Parker to forecast a 10 percent rally in the S&P 500, adding to positive sentiment. Morgan Stanley also benefited from a one-off tax break of $609m. Indeed, the average annualized revenue per broker ticked up 8% year-over-year to $978,000, from $905,000.
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. It’s $1.9 billion. This is a loss of 144 advisors from the previous quarter and down 545 advisors reported with the firm a year ago.
Advertisement
For the future, Pruzan said, the bank is working on digital cash management innovations to attract more customers to add to its $140bn cache of deposits.
