Morgan Stanley (NYSE:MS) advanced in pre-market trade after the owner of the world’s largest brokerage reported profit more than doubled in the second quarter as stronger performances by its investment banking and wealth management businesses offset a fall in revenue from bond trading.
Shares were up 1.4 percent at $32.95 at 8:29 a.m. in New York. The stock had risen 3.6 percent this year through yesterday.
Net income almost doubled to $1.94 billion, or 94 cents per share, in the April-to-June period, from $980 million, or 41 cents per share, a year earlier, the New York-based company said in a statement today.
Stripping out an accounting adjustment tied to the firm’s own debt and a tax benefit, profit was 60 cents per share, surpassing Wall Street's consensus of 56 cents per share.
Results included a tax benefit of $609 million or 31 cents per diluted share, related to the measurement of reserves and related interest, the firm said.
Revenue excluding accounting adjustments increased to $8.52 billion from $8.34 billion a year earlier. That result was slightly higher than the $8.22 billion analysts had expected
“Our quarterly results demonstrated solid performance, despite a muted operating environment," Chief Executive Officer James P. Gorman said in the statement. "We are seeing momentum across our businesses, with particular strength in Investment Banking, Equity Sales & Trading and Wealth Management."
Morgan Stanley's investment banking division generated $1.43 billion in second-quarter revenue. That figure included $418 million from financial advisory, $489 million from equity underwriting and $525 million from debt underwriting.
Return on equity, a measure of how well management reinvests earnings, was 7.8 percent in the first half, excluding accounting adjustments and the tax benefit. That was still below 10 percent, the firm’s estimate of its cost of equity.
Revenue from the bank's fast-growing wealth management business rose 5 percent to $3.72 billion.
Revenue from fixed-income, currency and commodities (FICC) trading fell 17 percent to $1 billion as a lack of volatility discouraged trading during the quarter.
Bank of America Corp (NYSE:BAC), alone among the big U.S. banks, reported an increase in revenue from the business, helped by a slight pickup in activity late in the quarter.
Morgan Stanley, the world's second-largest in mergers-and-acquisitions, benefited from a strong equities market in the quarter. Advisory revenue rose 26 percent to $418 million.
Morgan Stanley also showed some progress in reining in expenses. Overall, noninterest expense was $6.62 billion, down 1.4 percent from the year earlier but flat from the first quarter.