Morgan Stanley beats estimates on higher trading revenue

Morgan Stanley posts 2Q earnings beat

Benchmark Managing Partner Kevin Kelly and FBN’s Maria Bartiromo break down Morgan Stanley’s second-quarter results.

(Reuters) - Morgan Stanley reported a better-than-expected quarterly profit on Wednesday, driven by gains in its fixed income and equities trading businesses, rounding up a strong earnings season for U.S. banks.

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JPMorgan Chase & Co, Bank of America Corp, Goldman Sachs Group Inc, Morgan Stanley and Citigroup Inc have all reported second-quarter earnings which beat expectations, with only Wells Fargo & Co missing estimates.

Banks are benefiting from increased market volatility due in part to escalating trade tensions causing investors to buy and sell assets to protect their portfolios and take advantage of opportunities. Morgan Stanley highlighted its equity financing business and a stronger performance in commodities and credit products.

Morgan Stanley said net income rose to $2.4 billion in the quarter from $1.8 billion a year ago. Earnings per share rose to $1.30 from $0.87 the year before, beating the average analyst expectation of $1.11 per share, according to Thomson Reuters I/B/E/S data.

Shares in Morgan Stanley were up 2.9 percent in premarket trading.

Chief Executive Officer James Gorman said the bank had seen strength across all its businesses and geographies.


"The second quarter performance reflected active markets and healthy client engagement," he said in a statement.

Net revenue from the bank's sales and trading business rose 18 percent to $3.8 billion, with fixed income and equity trading businesses recording gains of 12 percent and 15 percent.

Rival Goldman Sachs said on Tuesday its trading revenue rose 17 percent, with bond trading showing a 45 percent jump and equity revenue remaining flat in its second quarter.

Morgan Stanley's net revenue rose 12 percent to $10.6 billion, with institutional securities accounting for 54 percent of the gains. Institutional securities business comprises the bank's investment banking and trading units.

The bank said net revenue at its wealth management business rose to $4.3 billion from $4.2 billion a year ago.

(Editing by Saumyadeb Chakrabarty and Meredith Mazzilli)

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