Ted Pick, CEO of Morgan Stanley, speaks on CNBC’s “Squawk Box” on the World Economic Forum Annual Meeting in Davos, Switzerland, on January 18, 2024.
Adam Galici | CNBC
Morgan Stanley said second-quarter profit and revenue beat analysts’ estimates as trading and investment banking results got here in higher than expected.
The company announced the next:
- Merits: $1.82 per share versus $1.65 per share (LSEG estimate)
- Revenue: $15.02 billion in comparison with an estimated $14.3 billion
The bank said profit rose 41 percent from the year-ago period to $3.08 billion, or $1.82 per share, resulting from a recovery in Wall Street activity. Revenue rose 12 percent to $15.02 billion.
However, the bank’s shares fell as much as 3.4% in premarket trading after the bank’s asset management division missed forecasts for a pointy decline in interest income.
Asset management revenues rose 2% to $6.79 billion, below estimates of $6.88 billion. Interest income fell 17% 12 months over 12 months to $1.79 billion.
Morgan Stanley explained that its wealthy clients continued to shift their money into higher-yielding investments resulting from the rate of interest environment, which led to lower deposit levels.
Morgan Stanley investors value the more stable nature of the asset management business in comparison with the less predictable nature of investment banking and trading and need to know more about expectations for the long run of the business.
Still, the bank benefited from its Wall Street-focused business model this quarter, as a recovery in business and investment banking helped the bank’s institutional securities division generate more revenue than its asset management division, reversing the same old dynamic.
Equity trading revenue jumped 18% to $3.02 billion, beating StreetAccount’s estimate by about $330 million. Fixed income trading revenue rose 16% to $1.99 billion, beating the estimate by $130 million.
Investment banking revenues rose 51% to $1.62 billion, beating estimates by $220 million, as fixed income issuance activity increased. Morgan Stanley said this was largely resulting from non-investment-grade corporations issuing debt.
“The company delivered another strong quarter in an improving capital markets environment,” CEO Ted Pick said within the press release. “We continue to execute on our strategy and remain well positioned to create growth and long-term value for our shareholders.”
Last week, JPMorgan Chase, Wells Fargo and Citigroup All three exceeded expectations for sales and profits, a series that continued Goldman Sachs on Monday, helped by a recovery in activity on Wall Street.
This story is developing. Please check back later for updates.
