Morgan Stanley fixed income sales and business failures eclipse second quarter results

Morgan Stanley CEO James P. Gorman attends a panel discussion at the New York Times 2015 DealBook Conference at the Whitney Museum of American Art on November 3, 2015 in New York City.

Morgan Stanley released second quarter results that beat analysts’ expectations for revenue and net income, as its wealth management business began to see the impact of its recent acquisitions of E-Trade and Eaton Vance.

But a failure in Morgan Stanley’s fixed income and trading business contributed to a roughly 2% drop in stocks ahead of the stock market at the start of Thursday’s session.

Overall revenue growth of 8% was driven by growth in all of its business units, including institutional securities, wealth management and investment management services.

Here are the key figures:

Returned: $ 14.8 billion, compared to the estimate of $ 14.0 billion
Adjusted EPS:
$ 1.89, versus estimate of $ 1.65

Morgan Stanley’s wealth management unit reported net income of $ 6.1 billion for the quarter, up 30% year-over-year. The results were driven by record highs for the stock market and an increase in transaction income from its E-Trade unit as more clients were active in the markets.

Income from investment banking services jumped 16% year-on-year to $ 2.4 billion, despite a slight decline in income from fixed income due to tighter credit spreads and increased volatility. But an increase in equity subscription income helped drive segment growth, with Morgan Stanley benefiting from IPOs, follow-up offers and large block trades as clients continued to access markets. capital.

The company’s allowance for bad debts on loans and loan commitments continued to decline from its pandemic peak to $ 73 million in the quarter, compared to $ 239 million for the second quarter of 2020. This decrease is due to the continuous improvement of the macroeconomic environment, according to the bank mentioned.

“With our transformed business model offering more stable and sustainable earnings, we have doubled our dividend and announced a $ 12 billion buyout as we move to return our excess capital to our shareholders. Our global franchise is very well positioned to continue our growth. CEO James told Gorman.

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