Morgan Stanley (MS) Tops Q2 EPS by 11c

Morgan Stanley (NYSE: MS) reported Q2 EPS of $0.87, $0.11 better than the analyst estimate of $0.76. Revenue for the quarter came in at $9.5 billion versus the consensus estimate of $9.09 billion.

James P. Gorman, Chairman and Chief Executive Officer, said, “Our second quarter results demonstrated the resilience of our franchise in a subdued trading environment. 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.”

Business Highlights

• Institutional Securities net revenues were $4.8 billion reflecting strength in equity sales and trading and M&A advisory, and improved results in underwriting.
• Wealth Management net revenues were $4.2 billion and pre-tax margin was 25%.2 Fee-based asset flows for the quarter were $19.9 billion.
• Investment Management net revenues were $665 million with assets under management of $435 billion.

Institutional Securities

Institutional Securities reported pre-tax income from continuing operations of $1.4 billion compared with pre-tax income of $1.5 billion a year ago. Net revenues for the current quarter were $4.8 billion compared with $4.6 billion a year ago.

• Investment Banking revenues of $1.4 billion increased from $1.1 billion a year ago:
• Advisory revenues of $504 million were relatively unchanged from the prior year quarter.
• Equity underwriting revenues of $405 million increased from $266 million in the prior year quarter on higher market volumes in follow-on offerings and IPOs.
• Fixed income underwriting revenues of $504 million increased from $345 million in the prior year quarter reflecting higher non-investment grade loan and investment grade bond fees.

Sales and Trading net revenues of $3.2 billion decreased from $3.3 billion a year ago:

• Equity sales and trading net revenues of $2.2 billion increased from $2.1 billion a year ago reflecting strong contributions across products and regions.
• Fixed Income sales and trading net revenues of $1.2 billion decreased from $1.3 billion a year ago driven by lower volatility and sporadic activity during the quarter.
• Other sales and trading net losses of $208 million compared with net losses of $186 million in the period a year ago.

Compensation expense of $1.7 billion increased from $1.6 billion a year ago driven by higher revenues. Non-compensation expenses of $1.7 billion for the current quarter increased from $1.4 billion a year ago, reflecting a provision related to a U.K. indirect (value-added) tax matter and higher volume driven expenses.

(Updated)

For earnings history and earnings-related data on Morgan Stanley (MS) click here.

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