Mor­gan Stan­ley re­ports bet­ter-than-ex­pected quar­terly profit

The Pak Banker - - FRONT PAGE -

NEW YORK: Wall Street in­vest­ment bank Mor­gan Stan­ley re­ported a lower, but bet­ter-than-ex­pected, ad­justed sec­ond-quar­ter profit on Wed­nes­day, helped by a de­cline in ex­penses. The bank said its net in­come at­trib­ut­able to com­mon share­hold­ers was $1.43 bil­lion, or 75 cents per share, in the quar­ter ended June 30. An­a­lysts on av­er­age had ex­pected earn­ings of 59 cents per share in the lat­est quar­ter, ac­cord­ing to re­prot. Mor­gan Stan­ley re­ported an ad­justed profit of $1.69 bil­lion, or 79 cents per share, a year ear­lier. The earn­ings for the lat­est quar­ter take into ac­count a rule change that no longer re­quires Mor­gan Stan­ley to re­flect changes in the value of its own debt in its earn­ings. Mor­gan Stan­ley, which is in the midst of a $1 bil­lion cost cut­ting pro­gram, said to­tal non-in­ter­est ex­penses fell 8.4 per­cent to $6.43 bil­lion in the quar­ter. Com­pen­sa­tion costs fell 8.9 per­cent to $4.02 bil­lion.

The bank, which has strug­gled to boost share­holder re­turns over the last sev­eral quar­ters, re­ported a re­turn on eq­uity of 8.3 per­cent, well short of Chief Ex­ec­u­tive James Gor­man's tar­get of 9 to 11 per­cent by the end of next year. Mor­gan Stan­ley's shares were up 3.5 per­cent at $29.18 in pre­mar­ket trad­ing. Like its ri­vals, the bank has had to fo­cus on cut­ting costs as in­vestors and com­pa­nies have steered clear of deal­mak­ing, list­ing stocks and is­su­ing debt. Gor­man has been shift­ing Mor­gan Stan­ley's fo­cus away from more volatile ar­eas such as bond trad­ing and to­ward more sta­ble busi­nesses such as wealth man­age­ment. The bank has re­or­ga­nized its fixed in­come unit since the be­gin­ning of the year, in­clud­ing ex­it­ing the phys­i­cal oil busi­ness and shed­ding head­count by about 25 per­cent.

Ad­justed sales and trad­ing rev­enue fell about 2 per­cent to 3.26 bil­lion. Rev­enue from fixed in­come and com­modi­ties trad­ing rose 2.4 per­cent to $1.30 bil­lion, while eq­ui­ties trad­ing rev­enue fell 5.5 per­cent to $2.15 bil­lion. "Our re­sults this quar­ter re­flect solid per­for­mance in an im­proved but still frag­ile en­vi­ron­ment," Gor­man said in a state­ment.

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