Morgan Stanley earnings hit by slowdown in investment banking

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Morgan Stanley reported a 30% year-on-year decline in second-quarter net profit as investment banking fees plunged amid a dramatic slowdown in stock market listings.

The bank also reported Thursday that it plans to pay a $200 million fine related to a broad federal investigation into the use of unapproved communication channels on Wall Street.

Morgan Stanley said net income applicable to shareholders was $2.4 billion or $1.39 per share, compared with $3.4 billion or $1.85 per share in the same period last year. Analysts had forecast quarterly net profit of $2.75 billion or $1.58 per share, according to data compiled by Bloomberg.

The bank’s second-quarter net income was $13.1 billion, down 11% from a year earlier, and slightly below analysts’ expectations of $13.2 billion.

Investment banking revenue fell 55% to $1.07 billion from analysts’ estimates of $1.3 billion. Trading revenue, which benefited from recent market volatility, rose 7% to $5 billion, in line with analysts’ estimates.

Wealth management revenue, which includes online trading platform ETrade, fell 6% to $5.7 billion, missing estimates for $6 billion.

In investment management, which is home to Eaton Vance following the fund manager’s acquisition by Morgan Stanley last year, revenue fell 17% to $1.4 billion, in line with analyst estimates.

In its spending discussion, Morgan Stanley signaled that it was nearing a settlement with regulators reviewing the use of unapproved communication channels by Wall Street staff.

It said it would be “impacted by $200 million related to a specific regulatory issue regarding the use of unapproved personal devices and company record-keeping requirements.”

Last year, JPMorgan Chase agreed to pay US regulators a record $200 million for failing to keep records of staff communications on personal devices.

This exhibit has been amended to reflect Morgan Stanley’s second quarter 2021 earnings per share

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