Morgan Stanley Profit Soars By 46% in the Second Quarter

Resulting from gains in all three of its main businesses, Morgan Stanley (NYSE: MS  ) announced today its net income from its core operations rose by 46% over the second quarter of last year to stand at $1.3 billion.

The total results at the bank were even more impressive, as it recognized a $609 million gain from a discrete tax asset, which caused its earnings per share to jump to $0.94, more than double the $0.43 per share recognized in the second quarter of 2013. However the second quarter of last year did see an adjustment of $0.08 per share resulting from its purchase of its final interest in the Morgan Stanley Smith Barney Joint Venture.

Overall, revenue at Morgan Stanley, excluding debt valuation adjustments (DVA), which account for changes in the value of certain debt securities the company has issued, rose by $181 million, or 2%. This was driven almost entirely by impressive gains in its investment banking operations, in which revenue rose 25% year over year to stand at $1.6 billion.

Morgan Stanley did see its sales and trading revenue from fixed income, commodities, and equities decline from $2.9 billion in the second quarter of last year to $2.6 billion in the most recent quarter, a decline of 12%.

In the second quarter all three core businesses saw gains in income from continuing operations before tax, led primarily by the Wealth Management business, which saw its income jump by $112 million, or 17%:

 

Q2 2013

Q2 2014

Change ($)

Change (%)

Institutional Securities

$981

$1,014

$33

3%

Wealth Management

$655

$767

$112

17%

Investment Management

$160

$205

$45

28%

Total

$1,796

$1,986

$190

11%

"Our quarterly results demonstrated solid performance, despite a muted operating environment," noted the CEO and Chairman of Morgan Stanley, James Gorman, in the announcement.

"We are seeing momentum across our businesses, with particular strength in Investment Banking, Equity Sales & Trading and Wealth Management – where profit margins hit 21% for the first time since the founding of the JV and assets entrusted to us by clients reached $2 trillion," Gorman continued. "We also continued to be disciplined on expenses, while focusing on delivering higher returns."

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