Morgan Stanley's profit jumps as investment banking recovers
Morgan Stanley's profit rose in the second quarter as investment banking activity rebounded on strength in equity and debt underwriting.
Shares of the bank still fell 2% in choppy premarket trading as wealth management revenue rose only marginally, after powering growth through most of 2022 and 2023.
The segment's revenue increased to $6.8 billion in the quarter from $6.7 billion a year earlier, roughly in line with Wall Street expectations, according to LSEG data. Net new assets in the quarter came in at $36 billion.
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The bank's net income, however, rose to $3.1 billion, or $1.82 per share, in the three months ended June 30, it said on Tuesday. That compares with $2.2 billion, or $1.24 per share, a year earlier.
"The firm delivered another strong quarter in an improving capital markets environment," said CEO Ted Pick in a statement.
A rosier economic outlook, expectations of U.S. interest rate cuts and surging equity markets have spurred buyouts, debt sales and stock offerings after a nearly two-year dry spell for Wall Street.
Global investment banking revenues jumped 17% in the first half to $41.6 billion, according to data from Dealogic.
Morgan Stanley's investment banking revenue surged 51% to $1.62 billion in the second quarter.
Within the business, equity underwriting revenue jumped 56% to $352 million, while fixed income underwriting surged 71% to $675 million. Advisory revenues also climbed 30% to $592 million.
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Goldman Sachs, JPMorgan Chase and Citi had also reported robust investment banking revenue.
Under former CEO James Gorman, Morgan Stanley had grown a wealth management powerhouse generating more stable revenue than more volatile businesses such as investment banking and trading. It aims to manage $10 trillion in client assets.
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The bank's institutional securities unit reported revenues of $7 billion in the second quarter, up from $5.7 billion a year earlier.
Morgan Stanley's total revenue jumped nearly 12% to about $15 billion in the quarter.