Morgan Stanley results top estimates as bank contains bond trading fall

Morgan Stanley brought the US banks’ earnings season to an upbeat close, beating second quarter forecasts in all of its key divisions and containing its fall in fixed income trading revenues to just 4 per cent.

The investment bank generated adjusted earnings per share of $0.87 in the three months to June, far better than the $0.76 expected by analysts and the $0.75 a year earlier.
Fixed income trading, where the other big Wall Street banks averaged revenue falls of 20 per cent, was down just 4 per cent to $1.24bn, vindicating the bank’s fixed income restructuring last year.

Investment banking fees rose 28 per cent to $1.4bn, led by a 49 per cent rise in the fees the bank made for underwriting debt and equity issued by its clients.

“Our second quarter results demonstrated the resilience of our franchise in a subdued trading environment,” said chief executive James Gorman. “Our wealth management business produced a 25% margin and our strong investment banking results attest to the diversity of our global business. We continue to deliver on our strategic goals and grow shareholder returns.”

Firm wide revenues came in at $9.5bn for the most recent quarter, up from $8.9bn a year earlier. Wealth management was the biggest contributor, with $4.2bn of revenue versus the $4.1bn expected by Wall Street analysts.

Equities trading revenues were $2.2bn, unchanged from a year earlier, while investment management revenues came in at $665m versus the $603m analysts expected.