A bond trading shake-up and cost cuts have helped investment banking giant Morgan Stanley (NYSE:MS) to beat quarterly profit expectations.
Although net income fell in the second quarter to US$1.43bn, or 75 cents per share, that was better than market forecasts of 59 cents per share.
The bank has refocused its bond-trading operation on deals that need little capital under new rules, such as interest rate swaps, rather than physical commodities.
Adjusted revenue from fixed income, currency and commodities trading in the second quarter rose 2.4% to US$1.3bn against a year ago,
Revenue in its equity trading business fell 5.5% to US$2.15 billion versus the same quarter a year ago.
The overall figures also benefited from a US$1bn cost-cutting drive, in which Morgan Stanley has cut travel expenses, closed data centers and moved staff to lower-cost sites.
Total non-interest costs fell 8.4% to US$6.43bn in the quarter. Its largest cost, compensation, fell 8.9% to US$4.02bn.