Morgan Stanley Released the Results from the Second Quarter

One of the largest U.S. banks released its financial results on Thursday. A New York-based Morgan Stanley posted second-quarter earnings as well as profit that surpassed analysts’ expectations on strength in equities trading and investment banking.

The firm’s strength has traditionally been in its equities-trading franchise, which is the biggest in the world. That business outperformed in the second quarter, producing $2.83 billion in revenue, more than $400 million over what analysts expected. Importantly, that business made up for the shortfall in fixed income, which produced $1.68 billion in revenue, below the $2 billion estimate.

Stock trading flourished in the second quarter for Wall Street and wealth management businesses also reached great results. Both of them benefited from high asset values as well as robust IPO activity. Another area that thrived in the second quarter is investment banking. Also, robust merger activity and related financings helped to boost that investment banking.

Thanks to a series of savvy acquisitions, Morgan Stanley’s CEO James Gorman transformed the bank’s wealth management franchise. Gorman also helped rebuild the firm’s trading operations and maintained its leading merger advisory practice.

Morgan Stanley delivered another very strong quarter according to James Gorman. He stated that the firm transformed its business model, thus it is able to provide stable and durable earnings.

As in the case of Goldman Sachs, Morgan Stanley posted strong investment banking results. The revenue from investment banking reached $2.28 billion and exceeded expectations. That helped Morgan Stanley’s institutional securities business, which houses its trading and advisory operations. Revenues from the firm’s institutional securities business reached $7.1 billion.

The two other main divisions at Morgan Stanley also surpassed expectations in the second quarter. Morgan Stanley’s investment management division, posted $1.7 billion in revenue, topping the $1.53 billion estimate.

Morgan Stanley and its rivals

A New York-based Morgan Stanley is the last of the six largest U.S. banks to report second-quarter earnings. Goldman Sachs exceeded expectations on strong advisory results.

Bank of America, Wells Fargo, Citigroup, and JPMorgan Chase surpassed analysts’ profit expectations. Banks released reserves as borrowers managed to reach better than expected results.

For example, JPMorgan Chase posted a $2.3 billion boost from releasing $3 billion in loan reserves after taking $734 million in charge-offs. The biggest U.S. bank by assets had a $5.2 billion reserve in the first quarter.