This morning, Morgan Stanley released their second quarter earnings before the market opened. Analysts estimated they would bring in $0.55 per share, increasing from $0.45 per share this time last year. Morgan Stanley exceed this easily, adding to an already successful earnings report season for Wall Street.
Morgan Stanley reported net revenues of $8.6 billion, beating out last year's number of $8.5 billion. For the current quarter, income from continuing operations applicable to Morgan Stanley was $1.9 billion. That's $0.94 per diluted share, compared with income of $1.0 billion. In 2013, it was only $0.43 per diluted share. As far as success rates go year-over-year, Morgan Stanley did quite well.
CEO James P. Gorman was quite pleased:
Our quarterly results demonstrated solid performance, despite a muted operating environment. We are seeing momentum across our businesses, with particular strength in Investment Banking, Equity Sales & Trading and Wealth Management – where profit margins hit 21% for the first time since the founding of the JV and assets entrusted to us by clients reached $2 trillion. We also continued to be disciplined on expenses, while focusing on delivering higher returns.”
While Gorman may be praising the wealth management department, he is less pleased with the bond traders. Though the overall performance was better than expected, bond trading is down. Still, this isn't all bad. While Morgan Stanley bond trading is down 8 percent, JPMorgan Chase was hit with a 15 percent decrease.
Additionally, it is interesting that Gorman specifically notes the success of equity trading. When Citibank reported their earnings, they pointed out issues with equity trading, taking a tumble of $226 million. Citi attributed $100 million of this decline to the troubles in Ukraine, stating "we actually hedged our equities book in Europe in anticipation of significant negative market reaction to the Russia-Ukraine situation, which ultimately didn’t materialize." It seems Citi was the anomaly with this Ukraine comment, while Morgan Stanley was more in line with other institutions.
Of all the big banks to report thus far, Morgan Stanley may be most pleased with their results. They were already up two percent in pre-market trading thanks to the good news.