Morgan Stanley fails to see profits as weak investment bank earnings offset strong trading

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  • Morgan Stanley reported lower earnings per share, net income and revenue in its second quarter report.
  • The results were also below expectations, due in particular to the weakness of the investment bank.

Morgan Stanley on Thursday reported lower second-quarter earnings and revenue that also missed analysts’ estimates, due to weak investment banking business.

Here are the key numbers:

  • Quarterly turnover: $13.13 billion vs $13.48 billion forecast by Bloomberg analysts
  • Diluted earnings per share: $1.39 vs $1.53 analyst consensus
  • Net revenue: $2.5 billion vs $3 billion analyst consensus

Revenue and EPS results represented year-over-year declines of 11% and 25%, respectively.

Morgan Stanley stock fell 1.21% in premarket trading Thursday to $74.98, and it’s down about 24% so far this year.

“Overall, the company delivered a strong quarter in a more volatile market environment than we have seen in some time,” CEO James Gorman said in a statement Thursday.

Quarterly results arrive as Wall Streetthe biggest companies have had to face headwinds like the surge inflationuncertain markets, and the war in Ukraine. Investors are also increasingly anticipating a recession in the United States. Earlier this year, Gorman warned there was a 50% chance of a recession.

Meanwhile, the sharp decline in equities during the quarter weighed on IPOs and mergers which typically provide a key source of fee income for investments. banks. But wild market swings are also benefiting trading revenue, which has helped boost Morgan Stanley’s first quarter results.

In the second quarter, equity trading revenue rose 5% to $2.96 billion, and fixed income trading revenue jumped 49% to $2.5 billion.

Investment banking revenue fell 55% to $1.07 billion due to lower completed M&A deals. Wealth management revenue fell 6% to $5.7 billion.

Earlier Thursday, JPMorgan Chase missed quarterly guidance and reported a 28% drop in second-quarter profit.

Citigroup reports Friday, while Bank of America and Goldman Sachs are due to report Monday.

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