Morgan Stanley Q2 Earnings: Higher Profits As Investment Banking Activity Rebounds, On Track To Reach $10T Client Assets

Tuesday, Morgan Stanley MS reported second-quarter EPS of $1.82, up from $1.24 a year ago and beating the consensus of $1.65.

The U.S. bank reported second-quarter sales of $15.02 billion, up 11.6% year over year, beating the consensus of $14.30 billion.

The sales were balanced across Wealth Management and Institutional Securities.

CNBC noted that Morgan Stanley’s Wall Street-focused business model paid off this quarter. A rebound in trading and investment banking drove higher revenue in its institutional securities division than in its wealth management division, reversing the usual trend.

Institutional Securities reported net revenues of $6.98 billion compared with $5.7 billion a year ago, reflecting strong performance across the franchise, with strength in Equity, driven by higher client activity, and in Investment Banking on robust debt underwriting results.

Investment Banking revenues were up 51% from a year ago to $1.62 billion. Advisory revenues increased to $592 million due to the higher number of completed M&A transactions.

Equity net revenues reached $3.02 billion, up 18% from a year ago. This reflects strong performance across business lines and regions, particularly in Asia, based on stronger client engagement and a constructive market environment.

Fixed-income trading revenue rose 16% to $1.99 billion. Provision for credit losses decreased on lower provisions on corporate loans compared to the prior-year quarter.

Wealth Management reported net revenues of $6.8 billion in the current quarter compared with $6.7 billion a year ago.

“The firm delivered another strong quarter in an improving capital markets environment,” CEO Ted Pick said in the release. “We continue to execute on our strategy and remain well positioned to deliver growth and long-term value for our shareholders.”

Morgan Stanley’s CFO on the company conference call said the bank is on track to reach a $10 trillion client asset target and that the Investment Banking business is in the early innings of recovery.

Price Action: At last check Tuesday, MS shares were down 2.92% at $102.19 during the premarket session.

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