Morgan Stanley's profit surges on investment banking

Morgan Stanley

Morgan Stanley

The unit had a pre-tax margin of 25%, delivering net income of $1.1 billion, up from $859 million.

Closing the earnings season for the big United States banks today, Morgan Stanley reported a 4% year-on-year fall in fixed-income sales and trading revenues to $1.24bn.

The New York investment bank reported earnings of 87 cents a share.

Analysts on average had expected earnings of 76 cents per share, according to Thomson Reuters I/B/E/S.

During the second quarter, a three-month stretch of calm markets that has done little to jolt Wall Street businesses, big banks including J.P. Morgan Chase & Co., Goldman Sachs Group Inc. and Citigroup Inc. offset trading declines with gains in other businesses such as commercial lending or private-equity investing.

Wealth management posted $4.15 billion in revenues, up from $3.8 billion.

Loans to wealth clients hit a record $74 billion as of June 30, up from $70 billion three months ago.

In the first quarter, Morgan Stanley's year-on-year growth in fixed income revenues was the best of its peers, fueled by the highly-tradable events including the so-called Trump trade.

Morgan Stanley said equities trading, a business in which it is typically strong, rose to $2.2 billion from $2.1 billion. That business is traditionally a laggard for Morgan Stanley, with its smaller balance sheet and history of bungling risk. Equity sales and trading revenues tipped up, while fixed income trading revenues dropped slightly.

The powerhouse bond trading units of these USA banks - which generate huge revenues - have been in sharp focus this quarter, with expectations that banks would fail to match their stellar start to the year amid a drop off in volatility.

Revenue was flat in stock trading, Morgan Stanley's strength.

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