Morgan Stanley quarterly profit mounts about 40 percent, grew three times faster than the market leader Goldman Sachs Group Inc.
Investment bank’s net income increases by $2.45 a share to $2.58 billion, in the quarter ended May 31, compare to $1.84 billion, or $1.75, a year earlier. Experts had forecast that bank’s average profit would be labeled near to $2.00.
Morgan Stanley’s net revenue also recorded 32 percent up from previous year’s overwhelming $11.5 billion rally. That included fixed-income sales and trading revenue of $2.9 billion, up 34 percent. It was Morgan Stanley’s second-best fixed-income quarter ever, fueled by strong interest rate, currency and commodities results that were offset a bit by a decline in energy commodities.
Quarterly wealth management revenue rose 17 percent to $1.64 billion, as client assets grew 16 percent to $728 billion. In asset management, where Morgan expanded its hedge fund offerings and launched a private equity business, revenue surged 68 percent to $1.51 billion.
The Discover credit card and payments division reported a 13 percent decline in revenue and a 38 percent drop in pretax income from last year, when loan losses remained unusually low following changes to U.S. bankruptcy laws. Morgan plans to spin off Discover to shareholders next week.
Chief Financial Officer David Sidwell asserts that Morgan Stanley’s mortgage revenue slipped from the first quarter when it profited from hedge positions, though other trading businesses helped offset any weakness.
The enthusiastic results come a week after Lehman Brothers’ strong earnings fueled optimism that Wall Street would escape any harm from rising subprime mortgage losses. But expectations were dampened after Goldman Sachs’ and Bear Stearns’ fixed-income trading profits took hits.
Analyst with Grimes & Co., Benjamin Wallace, said,
The tone was starting to get pessimistic. Now it really looks like institutional securities, investment banking, everything was pretty strong across the board
As news spread in the market Morgan Stanley shares mounts by $1.60, or 1.8 percent, to $89.40 in early New York Stock Exchange trade after hitting a session high of $90.33.
Image: Businessweek
Via: Journalnow
