Morgan Stanley Q2 Profit Down, Yet Tops View

(RTTNews) - Financial services firm Morgan Stanley reported Tuesday weak profit in its second quarter, despite increased revenues in a challenging market environment. Earnings per share and topline, however, beat market estimates.

James Gorman, Chairman and Chief Executive Officer, said, "The quarter started with macroeconomic uncertainties and subdued client activity, but ended with a more constructive tone. Consistent with our strategy, we continued to attract client assets .... Our Institutional businesses navigated the markets well through macro uncertainties. .. We remain confident in our ability to grow in various market environments while maintaining a strong capital position."

Further, the Board of Directors declared a $0.85 quarterly dividend per share, representing an increase of 7.5 cents per share, payable on August 15 to common shareholders of record on July 31.

In the quarter, Institutional Securities net revenues declined, reflecting continued muted activity in Investment Banking and declines in Equity and Fixed Income. This was driven by lower client activity in a less favorable market environment compared to a year ago.

Wealth Management net revenues increased 16 percent from a year ago. Asset management revenues decreased 2 percent reflecting lower asset levels primarily due to declines in the markets. Investment Management net revenues also were down 9 percent.

For the second quarter, the company's net income applicable to the shareholders totaled $2.05 billion or $1.24 per share, down 14 percent from $2.39 billion or $1.39 per share a year ago.

The latest second quarter was impacted by severance costs of $308 million associated with an employee action.

Analysts on average had expected the company to earn $1.15 per share, according to figures compiled by Thomson Reuters. Analysts' estimates typically exclude special items. The company's net revenue for the quarter rose 2.5 percent to $13.46 billion from $13.13 billion last year. The Street was looking for revenues of $13.08 billion for the quarter.

Total non-interest revenues grew 6 percent year-over-year to $11.45 billion.

Interest income surged to $12.05 billion from last year's $3.61 billion, while net interest dropped 12 percent from the prior year to $2.01 billion.

Provision for credit losses grew 59 percent to $161 million.

In pre-market activity on the NYSE, Morgan Stanley shares were losing around 0.2 percent to trade at $86.20.

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