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Morgan Stanley Q2 profit falls 11% despite strong trading activity

BBR Staff Writer Published 21 July 2016

Morgan Stanley has reported 11% decline in its net income for the second quarter of this year, even as it showed a strong performance in bond trading segment.

The investment banker posted a profit of $1.6bn in the April-June quarter compared to $1.8bn in the same quarter a year earlier.

Its revenues fell 9% to $8.9bn in the quarter against $9.7bn in the corresponding quarter last year.

Morgan Stanley chairman and chief executive officer James Gorman said: “Our results this quarter reflect solid performance in an improved but still fragile environment.

“In the midst of market uncertainty, we maintained our leadership positions across our core franchises and continued our focus on prudent risk management and judicious expense control. We remain committed to executing for our clients and delivering on our strategic priorities for our shareholders.”

The New York-based financial services firm earned a revenue of $4.6bn from institutional securities division, due to continued strength in equity sales and trading and solid performance in fixed income sales and trading.

Its wealth management division performance was consistent with the prior year period, posting a revenue of $3.8bn compared to $3.9bn a year ago.

Total client assets held by the firm stood at $2 trillion and its client assets in fee based accounts were $820bn at quarter end.

The bank’s revenue from investment management services decreased to $583m in the June quarter from $751m in the year-ago quarter, primarily reflecting lower investment gains and carried interest in infrastructure and private equity investments.

Morgan Stanley’s compensation expenses dropped to $4bn from $4.4bn, partially driven by lower revenues.

It posted 54% drop in its profit for the first quarter this year, as its trading revenue was hit by weak sentiment in the markets.

It posted 54% drop in its profit for the first quarter this year, as its trading revenue was hit by weak sentiment in the markets.

Net revenues of the firm declined to 7.8bn in the March quarter from $9.9bn in the same quarter last year.


Image: Morgan Stanley's office on Times Square, Midtown Manhattan, New York City. Photo courtesy of Jenix89/Wikipedia.