Morgan Stanley beats estimates on record wealth management revenue



Morgan Stanley on Tuesday posted second-quarter earnings and revenue that topped analysts’ expectations, helped by record wealth management results.

Here’s what the company reported:

  • Earnings: $1.24 a share vs $1.15 per share Refinitiv estimate
  • Revenue: $13.46 billion vs. expected $13.08 billion

The bank said profit declined 13% to $2.18 billion, or $1.24 a share, on lower trading results from a year ago and a round of layoffs that triggered $308 million in severance costs. Revenue climbed 2% to $13.46 billion.

Morgan Stanley shares rose more than 6%.

Under CEO James Gorman, Morgan Stanley’s reliance on wealth management has helped its steady earnings and boosted its valuation relative to peers. Gorman, who took over the firm in 2010, said in May he was preparing to step down within a year, setting off a succession race at the Wall Street powerhouse.

“The firm delivered solid results in a challenging market environment,” Gorman said in the earnings release. “The quarter started with macroeconomic uncertainties and subdued client activity, but ended with a more constructive tone.”

Despite lower market levels that caused some fees to dip from a year ago, second-quarter wealth management revenue rose 16% to $6.66 billion on higher interest income, exceeding the $6.5 billion estimate of analysts surveyed by FactSet. The division took in $90 billion in net new client assets.

The bank’s Wall Street division fared less well. The institutional securities business posted an 8% drop in revenue to $5.65 billion, driven by declines in trading. While equities trading generated $2.55 billion in revenue, topping the $2.37 billion FactSet estimate, fixed income produced $1.72 billion, which was well below the $1.99 billion estimate.

Investment banking revenue of $1.08 billion was roughly unchanged from a year ago and essentially matched analysts’ expectations.

Gorman said Tuesday during a conference call that the bank’s board was continuing to evaluate three internal candidates for CEO and that he would remain as executive chairman once his successor was promoted.

Furthermore, the interest rate increases that have roiled the industry may be close to finished, he told analysts.

“While we may not be quite at the end of rate increases, I believe we are very, very close to it,” Gorman said.

Morgan Stanley shares are up slightly this year, compared with the about 20% decline of the KBW Bank Index.

On Friday, JPMorgan Chase, Citigroup, and Wells Fargo each posted earnings that topped analysts’ expectations amid higher interest rates. Goldman Sachs wraps up big bank earnings Wednesday.

Image by: Unsplash




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Edmund Shing, PhD

Global Chief Investment Officer
BNP Paribas Wealth Management

Edmund has over 29 years of experience in financial markets in a wide variety of positions, ranging from proprietary trading to portfolio manager in a number of financial institutions in London and Paris.  He previously held the role of Global Head of Equity and Derivative Strategy at BNP Paribas in London from 2015 to 2020, and has been Chief Investment Officer at BNP Paribas Wealth Management since November 2020.

Edmund is responsible for piloting our investment strategy and will continues to rollout out recommendations and themes with actionable advice that brings our expertise to our clients and support to our client-facing teams.  In this time of change, his expertise in following and anticipating markets is a true value added for both our customers and those at Wealth Management who serve them.

Edmund has a PhD in Cognitive and Computing Science from the University of Birmingham in the United Kingdom, and has done advanced studies in Knowledge-Based Systems and in Experimental Psychology.  He is an EFFAS-certified financial analyst. He has also authored the book “The Idle Investor” published by Harriman House in 2015, proposing 3 simple investment strategies that take only a few minutes to execute per month.

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