Morgan Stanley on Thursday posted earnings and revenue for the second quarter that exceeded analysts’ expectations for strength in stock trading and investment banking.
This is how the bank did it:
Merits: $ 1.85 per share versus the estimate of $ 1.65 by analysts surveyed by Refinitiv.
Revenue: $ 14.8 billion versus the estimate of $ 13.98 billion.
While competing banks reported a sharp decline in income from fixed income trading – a dynamic that haunted Morgan Stanley’s bond dealers – the bank’s strength has traditionally been in its stock trading business, the largest in the world.
That business did better in the second quarter, generating $ 2.83 billion in revenue, more than $ 400 million above analysts’ expectations. It made up for the shortfall in fixed income securities, which had sales of $ 1.68 billion, which was below the estimate of $ 2 billion.
Stock trading flourished for Wall Street in the second quarter, as did asset management companies, both of which benefited from large assets and robust IPO activity. Another thriving area is investment banking, which is being driven by robust merger activity and related funding.
Like rival Goldman Sachs, Morgan Stanley had strong results in investment banking with $ 2.38 billion in revenue surpassing the estimate of $ 2.1 billion.
This helped the company’s institutional securities business, which houses its trading and advisory activities, generate sales of $ 7.1 billion, about $ 350 million more than expected.
But the other two major divisions of New York’s Morgan Stanley also exceeded expectations in the quarter.
The bank’s massive wealth management business, bolstered by last year’s E-Trade acquisition, had sales of $ 6.1 billion, beating the estimate of $ 5.9 billion.
The investment management division, backed in part by the purchase of Eaton Vance last year, had sales of $ 1.7 billion, beating the estimate of $ 1.53 billion.
Through a series of clever acquisitions, Gorman has grown the bank’s wealth management franchise into one of the largest in the world. He also helped rehabilitate the company’s trading business and maintained its leading merger advisory practice.
“The company delivered another very strong quarter with contributions from all of our businesses,” Gorman said in the press release. “As our transformed business model offers more stable and lasting returns, we have doubled our dividend and announced a $ 12 billion buyback to return our excess capital to shareholders. Our global business is very well positioned to drive further growth . “
The bank’s shares fell 1.1% in pre-trading hours on a wider sell-off. Ahead of Thursday, Morgan Stanley shares were up 35% this year, compared with the KBW Bank Index’s 26% increase.
Morgan Stanley is the last of the six largest US banks to publish earnings for the second quarter.
JPMorgan Chase, Bank of America, Wells Fargo and Citigroup all beat analysts’ earnings expectations by releasing funds previously earmarked for loan defaults. Goldman outperformed estimates based on strong advisory results.
This story evolves. Please check again for updates.
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