- REUTERS/Joshua Roberts
Morgan Stanley just reported second-quarter earnings that beat expectations on Wednesday morning.
The firm reported earnings per share of $0.75 on revenue of $8.91 billion.
Analysts were expecting earnings per share of $0.60 on revenue of $8.31 billion, according to Bloomberg.
“Our results this quarter reflect solid performance in an improved but still fragile environment,” CEO James Gorman said in a statement.
“In the midst of market uncertainty, we maintained our leadership positions across our core franchises and continued our focus on prudent risk management and judicious expense control.”
The firm beat expectations on trading and investment banking in Q2.
- Total sales and trading revenues came in at $3.26 billion ($3.12 billion expected), down 7% from the year-ago quarter.Fixed-income trading revenue was $1.30 billion ($1.01 billion expected).
- This was down 6% from the same quarter last year. The firm called it “solid performance.”
Equities trading revenue came in at $2.15 billion ($2.11 billion expected).
- This was down 8% from the year-ago quarter, reflecting reduced volumes in Asia but partially offset by better performance in Europe and the US, the firm said.
Total investment banking revenue was $1.11 billion ($1.10 billion expected), down 23% from last year.
- Advisory revenues were up 17% from last year on higher levels of completed M&A, while equity underwriting revenues were down 46% from the year-ago quarter, which the firm said reflected lower market volumes. Debt underwriting was down 35% on lower bond and loan fees.
Wealth management revenues of $3.81 billion were down 2% from $3.88 billion a year ago.
In the same quarter last year, Morgan Stanley reported earnings per share of $0.85 ($0.74 expected) on revenue of $9.7 billion ($9.14 billion expected). Excluding one-time items, earnings per share were $0.79.
In the first quarter, Morgan Stanley beat expectations but profit dropped by more than 50%. It reported diluted earnings per share of $0.55 ($0.47 expected) on revenue of $7.88 billion ($7.76 billion expected).
The big story during the second quarter was the UK’s decision in June to leave the European Union, which sent shockwaves through markets and could deter central banks from raising interest rates anytime soon.
In the short term, that appears to have been good news for banks’ trading revenues, but the long-term impacts are less rosy. Bank profitability is based largely on the rate at which banks make loans. Lower global interest rates, in turn, negatively affect bank bottom lines.