By Peter Rudegeair
Morgan Stanley said on Monday that second-quarter profit was
$1.81 billion as the company managed through an environment of
brisk deal-making and volatile markets.
The New York-based bank reported a profit of $0.85 per
share.
That compares to the $1.9 billion, or $0.92 per share, it
reported in the same period of 2014. Analysts polled by Thomson
Reuters had expected earnings of $0.74 a share.
Shares in Morgan Stanley were up 3.9% in pre-market trading.
Revenues rose to $9.74 billion from $8.61 billion. Excluding
accounting adjustments, revenue was $9.56 billion, more than the
$9.10 billion analysts had expected.
Morgan Stanley is coming off a strong first quarter in which
Chief Executive James Gorman's strategy of de-emphasizing risky
businesses like bond trading and bulking up more consistent ones
like wealth management bore fruit. This quarter's earnings are the
first since former Morgan Stanley Chief Financial Officer Ruth
Porat left to take the same position at Google Inc. She was
replaced by a veteran Morgan Stanley investment banker, Jonathan
Pruzan.
On Monday morning, Mr. Pruzan is slated to discuss details of
results including trading revenue that totaled $3.5 billion in the
quarter, up 32% from $2.65 billion in the same period a year ago.
At rival Goldman Sachs Group Inc., second-quarter trading revenue
was down 6%.
Within trading, revenue from bonds, foreign-exchange and
commodities was up 30% to $1.38 billion and revenue from equities
was up 28% to $2.34 billion.
Revenue from investment banking totaled $1.44 billion in the
second quarter, a 1% increase from $1.43 billion in the second
quarter of 2014.
Profit in Morgan Stanley's wealth-management arm was $561
million compared with $471 million last year.
Morgan Stanley's firmwide expenses rose 5% to $7.02 billion from
$6.68 billion in the second quarter last year. Compensation and
benefits expenses were $4.41 billion, up 5% from $4.2 billion a
year ago.
Return on equity, a commonly used measure of bank profitability
that Mr. Gorman has flagged as a key metric, was 9.1% compared with
10.7% in the second quarter a year ago excluding an accounting
adjustment. Morgan Stanley executives have pledged to lift return
on equity above 10%.
After a strong 2014, shares in Morgan Stanley have risen around
3.5% since the start of 2015 compared with a 6.7% increase in the
KBW index of bank stocks over the same period.
Corrections & Amplifications
A previous version of this story misstated the year-ago profit
for Morgan Stanley. It's $1.9 billion.
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