Morgan Stanley Q2 earnings, revenue fall on trading slump but beat Street view

Investment banking firm Morgan Stanley (NYSE: MS) reported a decline in second-quarter earnings and revenues amid continued weakness in the equity trading business. The results, however, exceeded market expectations, driving the stock slightly up in the pre-market session on Thursday.  

Net earnings of the New York-based bank declined to $2.2 billion or $1.23 per share from $2.4 billion or $1.3 per share in the second quarter of 2018 but topped the Street view.

At $10.2 billion, revenues were down 3% from last year. The top-line, meanwhile, came in above the estimates. Hurting the revenue performance, institutional securities revenue declined around 11% during the quarter, mainly due to a sharp fall in bond and equity trading. Meanwhile, investment banking and wealth management segments registered modest growth.

Hurting the revenue performance, institutional securities revenue declined around 11% during the quarter

James Gorman, Chief Executive Officer, said, “We reported solid quarterly results across all our businesses. Firmwide revenues were over $10 billion and we produced an ROE within our target range, demonstrating the stability of our franchise. We remain focused on serving our clients and pursuing growth opportunities while diligently managing expenses.”

At the end of the quarter, book value per share was $44.13, up 9% year-over-year. Return on Equity slipped to 11.2% from 13% last year.

During the quarter, the management announced share repurchase of up to $6.0 billion through the second quarter of 2020, marking an increase of about $1.3 billion. Also, the quarterly dividend was increased to $0.35 per share.

Also see: Morgan Stanley Q4 2018 Earnings Call Transcript

Earlier this week, Citigroup (C) posted a 20% increase in second-quarter earnings to $1.95 per share, aided by a 2% rise in revenues. Goldman Sachs (GS) reported lower earnings and revenues for the latest quarter as its main business segments witnessed a slump.

The recovery of Morgan Stanley shares from the multi-year lows seen towards the end of last year lost momentum in recent weeks. The stock, which gained 8% since the beginning of the year, gained modestly in the pre-market session Thursday.

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