Morgan Stanley profit beats forecasts
By Stephen Bernard |
July 22, 2010, Thursday
|
Print Edition
Print Edition
MORGAN Stanley said yesterday its second-quarter net income rose to US$1.58 billion, easily topping forecasts as its Smith Barney brokerage helped the bank recover from a loss a year ago.
Morgan Stanley joined other banks in reporting that its trading revenue fell from the first quarter, the result of the stock market's spring plunge. But the company, hurt a year ago by a conservative trading strategy and steep losses on real estate investments, was able to beat analysts' overall revenue and profit expectations for this latest quarter.
Morgan Stanley's net income after payment of preferred stock dividends rose to US$1.09 per share from a loss of US$1.10 per share a year earlier, when it lost US$1.26 billion.
Earnings from continuing operations, which excludes special charges, were 80 US cents per share. Revenue jumped 53 percent to US$7.95 billion. Analysts polled by Thomson Reuters forecast earnings of 46 US cents per share on revenue of US$7.93 billion.
Morgan Stanley's results came a day after competitor Goldman Sachs Group Inc reported an 83 percent drop in profits as trading revenue fell sharply. Goldman also took charges to cover its civil fraud settlement with the Securities and Exchange Commission and costs tied to paying taxes on employee bonuses in Britain.
The slowdown from the market wasn't as pronounced at Morgan Stanley, which saw trading revenue fall 11 percent to US$3.35 billion compared with the first quarter.
Morgan Stanley was criticized last year for being too passive in its trading and missing out on some of the big profits that other banks made during the stock market's big rally. Trading revenue nearly doubled from the second quarter last year.
Morgan Stanley also has a huge retail brokerage business that it draws much of its revenue from, unlike Goldman Sachs, which is highly reliant on institutional clients for its business.
The brokerage unit, Morgan Stanley Smith Barney, generated US$3.07 billion in revenue in the second quarter, compared with US$1.92 billion during the year-ago period.
Morgan Stanley joined other banks in reporting that its trading revenue fell from the first quarter, the result of the stock market's spring plunge. But the company, hurt a year ago by a conservative trading strategy and steep losses on real estate investments, was able to beat analysts' overall revenue and profit expectations for this latest quarter.
Morgan Stanley's net income after payment of preferred stock dividends rose to US$1.09 per share from a loss of US$1.10 per share a year earlier, when it lost US$1.26 billion.
Earnings from continuing operations, which excludes special charges, were 80 US cents per share. Revenue jumped 53 percent to US$7.95 billion. Analysts polled by Thomson Reuters forecast earnings of 46 US cents per share on revenue of US$7.93 billion.
Morgan Stanley's results came a day after competitor Goldman Sachs Group Inc reported an 83 percent drop in profits as trading revenue fell sharply. Goldman also took charges to cover its civil fraud settlement with the Securities and Exchange Commission and costs tied to paying taxes on employee bonuses in Britain.
The slowdown from the market wasn't as pronounced at Morgan Stanley, which saw trading revenue fall 11 percent to US$3.35 billion compared with the first quarter.
Morgan Stanley was criticized last year for being too passive in its trading and missing out on some of the big profits that other banks made during the stock market's big rally. Trading revenue nearly doubled from the second quarter last year.
Morgan Stanley also has a huge retail brokerage business that it draws much of its revenue from, unlike Goldman Sachs, which is highly reliant on institutional clients for its business.
The brokerage unit, Morgan Stanley Smith Barney, generated US$3.07 billion in revenue in the second quarter, compared with US$1.92 billion during the year-ago period.
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