REUTERS: Morgan Stanley reported a drop in quarterly profit but beat analysts’ expectations on slim gains in its wealth management business and lower expenses.
The results capped earnings for big US banks and underscored weakness in Wall Street-focused businesses in a quarter marked by lower market activity due to trade tensions and rising bets of a cut in interest rates.
Main Street consumer lending, however, fared well in the quarter as a healthy US economy fuelled consumer spending and loan growth.
Revenue from Morgan Stanley’s wealth management business rose 1.9 per cent to US$4.40 billion from a year earlier, and accounted for 43 per cent of total revenue. Chief Executive Officer James Gorman has been focusing on the unit to help the bank tide over swings in market-related businesses.
Overall sales and trading revenue fell 12 per cent, with both bond and equity trading seeing a dip. In contrast, Morgan Stanley’s main rival Goldman Sachs Group Inc on Tuesday reported a drop in revenue from bond trading but higher equities trading.
Revenue from investment banking, which includes advising on deals and helping corporations raise money, fell 13 per cent and pushed total revenue down to US$10.2 billion.
The bank said earnings attributable to Morgan Stanley fell to US$2.20 billion, or US$1.23 per share, in the second quarter ended Jun 30, from US$2.44 billion, or US$1.30 per share, a year ago.
Non-interest expenses fell 2 per cent to US$7.34 billion, helped by lower compensation costs.
Analysts were looking for a profit of US$1.14 per share, according to IBES data from Refinitiv, with revenue of US$9.99 billion.