Morgan Stanley reported second quarter earnings Wednesday that soundly topped expectations, helped by an increase in stock trading revenues and profits from its wealth management business.
Earnings per share: 87 cents vs. 76 cents expected by a Thomson Reuters consensus estimate.
Revenue: $9.50 billion vs. the $9.09 billion estimate.
Shares climbed 2.5 percent in premarket trade.
Morgan Stanley’s markets revenue held up better than other big banks that reported this quarter.
Equity sales and trading net revenues increased by $100 million, little changed from a year ago but up 7 percent from the first quarter, “reflecting strong contributions across products and regions,” the release said.
Overall sales and trading revenue decreased by $100 million, or 2 percent, from a year ago, to $3.2 billion. Bond trading revenue fell $100 million, or 4 percent, “driven by lower volatility and sporadic activity during the quarter,” the release said.
In contrast, Goldman Sachs reported fixed income, currency and commodities trading revenue dropped 40 percent from the second quarter of 2016. JPMorgan Chase said overall trading revenue fell 14 percent and fixed income trading revenue declined 19 percent. Bank of America said fixed income trading sales fell 14 percent. Citi also said its second-quarter revenue from fixed income trading fell 6 percent.
“Our second quarter results demonstrated the resilience of our franchise in a subdued trading environment,” Chairman and CEO James P. Gorman said in a statement. “Our wealth management business produced a 25% margin and our strong investment banking results attest to the diversity of our global business.”
Wealth Management net revenues were $4.2 billion and the pre-tax margin was 25 percent.
In the second quarter of 2016, Morgan Stanley reported earnings per share of 75 cents on revenue of $8.9 billion.
The Federal Reserve in late June did not object to Morgan Stanley’s capital return plan, along with 33 other major banks. Only Capital One received conditional approval.
Morgan Stanley said it plans to declare a 25 cent quarterly dividend in the third quarter, an increase of 5 cents. The bank also said it will increase share repurchases from $3.5 billion to up to $5 billion of outstanding common stock for the four quarters, also beginning in the third quarter.
Shares of Morgan Stanley are up about 7 percent for the year.
