- Here’s what they reported: Earnings of $1.82 a share vs. $1.65 a share LSEG estimate
- Revenue of $15.02 billion vs. $14.3 billion estimate
- Morgan Stanley shares dropped after the bank’s wealth management division missed estimates on a steep decline in interest income.
Morgan Stanley said second-quarter profit and revenue topped analysts’ estimates on stronger-than-expected trading and investment banking results.
Here’s what the company reported:
- Earnings: $1.82 a share vs. $1.65 a share LSEG estimate
- Revenue: $15.02 billion vs. $14.3 billion estimate
The bank said profit surged 41% from the year-earlier period to $3.08 billion, or $1.82 per share, helped by a rebound in Wall Street activity. Revenue rose 12% to $15.02 billion.
Morgan Stanley benefited from its Wall Street-centric business model in the quarter, as a rebound in trading and investment banking helped the bank’s institutional securities division earn more revenue than its wealth management division, flipping the usual dynamic.
Equity trading generated an 18% jump in revenue to $3.02 billion, exceeding the StreetAccount estimate by about $330 million. Fixed income trading revenue rose 16% to $1.99 billion, topping the estimate by $130 million.
Investment banking revenue surged 51% to $1.62 billion, exceeding the estimate by $220 million, on rising fixed income underwriting activity. Morgan Stanley said that was primarily driven by non-investment-grade companies raising debt.
But results in the bank’s wealth management underwhelmed. Revenue rose 2% to $6.79 billion, missing the $6.88 billion estimate.
While the division’s revenue rose thanks to higher stock market levels, interest income plunged 17% from a year earlier to $1.79 billion.
Morgan Stanley said that’s because its rich clients were continuing to shift cash into higher-yielding assets, thanks to the rate environment, which resulted in lower deposit levels.
Shares of the bank fell 3.4% in premarket trading.
“The firm delivered another strong quarter in an improving capital markets environment,” CEO Ted Pick said in the release. “We continue to execute on our strategy and remain well positioned to deliver growth and long-term value for our shareholders.”
Last week, JPMorgan Chase, Wells Fargo and Citigroup each topped expectations for revenue and profit, a streak continued by Goldman Sachs on Monday, helped by a rebound in Wall Street activity.
This story is developing. Please check back for updates.
Source: Finance - cnbc.com
