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UPDATE 2-Morgan Stanley profit beats on wealth management gains, lower expenses

Reuters New York
Updated: 18-07-2019 18:58 IST
UPDATE 2-Morgan Stanley profit beats on wealth management gains, lower expenses

Image Credit: Wikimedia

Morgan Stanley reported a drop in quarterly profit but beat analysts' expectations on gains in its wealth-management business and lower expenses. The results capped earnings for big U.S. banks and underscored weakness in Wall Street-focused businesses in a quarter marked by lower market activity due to trade tensions and rising bets of a cut in interest rate.

Morgan Stanley is distinct from its competitors in that it gets half of its revenue from wealth management, which acts as ballast during market fluctuations. Revenue from the wealth management business rose 1.9% to $4.40 billion from a year earlier and accounted for 43% of total revenue. The business beat its pre-tax margin target at 28.2%.

Chief Executive Officer James Gorman has been focusing on the unit to help the bank tide over swings in market-related businesses. Morgan Stanley shares were 1.4% lower in pre-market trading Thursday.

Overall, Morgan Stanley's sales and trading revenue fell 12%, with both bond and equity trading seeing a dip. By comparison, main rival Goldman Sachs Group Inc on Tuesday reported a drop in revenue from bond trading but higher equities trading. Morgan Stanley Chief Financial Officer Jonathan Pruzan described the quarter as strong overall and said that the 14% decrease year over year in equity sales and trading net revenues was due to last year's exceedingly good first six months.

"We are No. 1 in the world in (equities sales and trading) business," Pruzan said. "The first half of last year was quite strong - tax cuts, globally synchronized growth, all that good stuff." Revenue from investment banking, which includes advising on deals and helping corporations raise money, fell 13%, helping push the bank's total revenue down to $10.2 billion.

The bank said earnings attributable to Morgan Stanley fell to $2.20 billion, or $1.23 per share, in the second quarter ended June 30, from $2.44 billion, or $1.30 per share, a year ago. Non-interest expenses fell 2% to $7.34 billion, helped by lower compensation costs.

Analysts were looking for a profit of $1.14 per share, according to IBES data from Refinitiv, with revenue of $9.99 billion.

Also Read: Morgan Stanley quarterly profit falls 10%

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)

COUNTRY : United States