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Sturdy earnings in wealth administration helped Morgan Stanley to an expectation-beating set of second-quarter outcomes, even because the financial institution recorded a steeper fall in fastened revenue income than its friends.
Drawing the shut on Wall Road’s huge financial institution earnings season, Morgan Stanley mentioned it made web revenues of $10.2bn within the second quarter, down three per cent year-on-year however higher than the $9.99bn anticipated by analysts contributing to Factset’s consensus.
Quarterly earnings per share got here in at $1.23, versus the $1.13 in Factset’s consensus and $1.30 a 12 months earlier.
Wealth administration, an space that has outsize significance for Morgan Stanley relative to its friends, delivered pre-tax income of $1.2bn, up 7 per cent year-on-year, as revenues rose 2 per cent. Funding administration additionally had a powerful quarter, rising web revenues by 21 per cent 12 months on 12 months to $839m.
Institutional securities, the division which homes Morgan Stanley’s buying and selling and funding banking operations, suffered an 11 per cent fall in revenues year-on-year. The drop was most acute in fastened revenue buying and selling, the place Morgan Stanley’s revenues dipped 18 per cent, worse than the common 6.9 per cent fall throughout the opposite huge 4 buying and selling banks.
Morgan Stanley mentioned the decline in rates of interest, which have weighed closely on the second quarter financial institution’s earnings season, hit fastened revenue revenues as did “decrease volatility, in addition to a subdued stage of structured transactions”.
The financial institution’s revenues from funding banking had been down 13 per cent year-on-year, a drop that was additionally worse than its rivals.
Morgan Stanley boss James Gorman described the earnings as “strong”. “We produced an ROE (return on fairness) inside our goal vary, demonstrating the soundness of our franchise,” he mentioned. “We stay targeted on serving our purchasers and pursuing progress alternatives whereas diligently managing bills.”
The outcomes carry the curtain down on an earnings season which has been dominated by issues about low rates of interest hitting margins, notably at retail banks.