Morgan Stanley’s Second-Quarter Results Beat Views

Morgan Stanley (MS) on Thursday posted better-than-expected second-quarter earnings and revenue despite net revenues falling in the firm’s investment banking and sales and trade businesses.

The New York-based investment bank reported per-share earnings of $1.23 for the quarter ended June 30, down from $1.30 for the prior-year period but ahead of Capital IQ’s consensus of $1.16. Net revenue for the quarter fell to $10.24 billion from $10.61 billion last year. The Street had expected $10.02 billion.

“We reported solid quarterly results across all our businesses,” said Chief Executive James Gorman. “Firmwide revenues were over $10 billion and we produced an ROE within our target range, demonstrating the stability of our franchise.”

Net revenue at the bank’s institutional securities business fell to $5.1 billion from $5.7 billion while pre-tax income fell to $1.5 billion from $1.8 billion.

Investment banking net revenue fell 13% to $1.47 billion as advisory revenue was driven lower on weaker market volumes. Equity underwriting rose to $546 million from $541 million as initial public offerings and follow-on offerings strengthened. Fixed income underwriting fell to $420 million from $540 because of declines in loan issuances and lower market volumes.

Net revenue from the bank’s sales and trading operations slid 12% to $3.3 billion as equity sales and trading were dented by lower client balances and realized spreads. Declining interest rates, lower volatility and a subdued level of structured transactions pushed down fixed income revenue lower.

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