Financial Stock Under Pressure: Morgan Stanley (NYSE: MS)

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Morgan Stanley (NYSE:MS) stock fell over 0.02% on 16th July, 2021 (As of, 13:15:16 UTC-4 · USD ; Source: Google finance). Net revenue of its institutional securities division, which houses the bank’s largest reporting lines, sales and trading and investment banking, fell about 14% to $7.09 billion in the quarter.

The company’s net income applicable to common shareholders rose to $3.4 billion in the second quarter ended June 30 from $3.05 billion a year earlier. The company has delivered a better-than-expected quarterly profit, as its investment banking business benefited from record levels of capital market activity and helped offset a drop in fixed income underwriting revenue.

MS in the second quarter of FY 21 has reported the adjusted earnings per share of $1.85, while reported the adjusted revenue of $14.8 billion in the second quarter of FY 21 compared with $13.7 billion a year ago. Investment banking revenue grew 16% to $2.38 billion, largely driven by gains from advising on deals and equity underwriting. Institutional Securities reported net revenues for the current quarter of $7.1 billion compared with $8.2 billion a year ago. Equity net revenues rose 8% from a year ago, driven by high levels of client activity with particular strength in Asia. The results reflect higher revenues in prime brokerage partially offset by declines in cash equities and derivatives driven by lower volatility and volumes compared to a year ago. Fixed Income net revenues were down 45% from a year ago due to lower bid-offer spreads and volatility as well as tighter credit spreads.

Moreover, Wealth Management net revenues grew 30% from a year ago. The asset management revenues increased from a year ago due to higher asset levels driven by market appreciation and positive fee-based flows. Transactional revenues rose 49% excluding the impact of lower mark-to-market gains on investments associated with certain employee deferred compensation plans. Net interest income (NII) increased from a year ago on the back of incremental NII as a result of the E*TRADE acquisition and higher bank lending partially offset by the impact of lower rates and an increase in mortgage securities prepayment amortization expense.

Additionally, the company has declared a $0.70 quarterly dividend per share, payable on August 13, 2021 to common shareholders of record on July 30, 2021, a 100 percent increase from the current $0.35 per share dividend.

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