Morgan Stanley (MS) Q2 2024 earnings

Morgan Stanley Second-quarter profit and revenue exceeded analyst expectations on stronger-than-expected trading and investment banking results.

This is what the company reported:

• Income: $1.82 per share vs. $1.65 per share LSEG estimate
• Gain: $15.02 billion vs. $14.3 billion estimate

The bank said profit rose 41% from the same period last year to $3.08 billion, or $1.82 per share, helped by a recovery in activity on Wall Street. Revenue rose 12% to $15.02 billion.

The bank’s shares had fallen earlier in the session after the bank’s asset management unit missed estimates of a decline in interest income. They rose less than 1% on Tuesday.

Asset management revenue rose 2% to $6.79 billion, below the $6.88 billion estimate, and interest income fell 17% from a year earlier to $1.79 billion.

Morgan Stanley said this is because, thanks to the interest rate environment, its wealthy clients continued to shift cash into higher-yielding assets, resulting in lower deposit levels.

Investors in Morgan Stanley appreciate the more stable nature of the asset management industry versus the less predictable nature of investment banking and trading, and they will want to hear more about expectations for the company’s future.

Still, the bank benefited from its Wall Street-focused business model this quarter as a rebound in commercial and investment banking saw the bank’s institutional securities division earn more revenue than its asset management division, reversing the usual dynamic.

The stock trade generated an 18% increase in revenue to $3.02 billion, beating StreetAccount’s estimate by about $330 million. Fixed income trading revenue rose 16% to $1.99 billion, beating estimates by $130 million.

Investment banking revenue rose 51% to $1.62 billion, beating estimates by $220 million, driven by increasing fixed income insurance activity. Morgan Stanley said this was mainly driven by non-investment grade companies raising debt.

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

Last week, JPMorgan Chase,Wells Fargo and Citi Group each exceeded expectations for sales and profits, a streak that continued Goldman Sachs on Monday, helped by a recovery in activity on Wall Street.