By Peter Rudegeair and Liz Hoffman

Morgan Stanley said its profit fell 12% in the second quarter as the company weathered volatile markets that affected its investing and corporate clients.

Earnings and revenue, however, beat expectations, pushing shares up 2.9% premarket.

The bank's net income declined to $1.58 billion, or 75 cents a share, from $1.81 billion, or 85 cents a share, a year ago. Analysts polled by Thomson Reuters had expected a per-share profit of 59 cents.

Revenue tumbled 8.6% to $8.91 billion. Analysts had forecast $8.3 billion.

Trading revenue fell 7.1% to $3.26 billion from $3.5 billion a year ago. Excluding an accounting adjustment, trading revenue fell 2%.

Investment-banking revenue fell 23% to $1.11 billion from $1.44 billion in the second quarter of 2015. Fees from advising on mergers and other deals rose 17% to $497 million from $423 million a year ago. Revenue on stock and bond underwriting slipped 40% to $611 million from $1.02 billion in the same period a year prior.

Morgan Stanley Chairman and CEO James Gorman has been working to boost profitability by trimming the capital committed to bond trading desks and boosting loans to investing clients of the firm's large wealth management division. Earlier this year, the firm also disclosed its aim to cut $1 billion in expenses, a theme that has gained momentum at banks from Goldman Sachs Group Inc. to Bank of America Corp. this quarter.

Morgan Stanley's firmwide expenses fell 8.4% to $6.43 billion from $7.02 billion in the second quarter last year. Cost from employee pay and benefits fell 8.9% to $4.02 billion from $4.41 billion.

Return on equity fell to 8.3% from 9.1% in the second quarter of 2015. Morgan Stanley executives have pledged to lift returns to 9%-11%.

Morgan Stanley shares have tumbled 11% this year as investors fretted over the firm's ability to weather the slowdown. Other banks reported better-than-expected trading results in the second quarter, driven in part by a burst of client activity around the U.K. vote to leave the European Union in June.

Write to Peter Rudegeair at Peter.Rudegeair@wsj.com and Liz Hoffman at liz.hoffman@wsj.com

(END) Dow Jones Newswires

July 20, 2016 07:35 ET (11:35 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.
Morgan Stanley (NYSE:MS)
Historical Stock Chart
From Aug 2024 to Sep 2024 Click Here for more Morgan Stanley Charts.
Morgan Stanley (NYSE:MS)
Historical Stock Chart
From Sep 2023 to Sep 2024 Click Here for more Morgan Stanley Charts.