Morgan Stanley (NYSE:MS) stock rose 6.03% (As on July 18, 11:40:40 AM UTC-4, Source: Google Finance) after the company posted second-quarter earnings and revenue that topped analysts’ expectations, helped by record wealth management results. The bank said profit declined 13% to $2.18 billion on lower trading results from a year ago and a round of layoffs that triggered $308 million in severance costs. Despite lower market levels that caused some fees to dip from a year ago, second-quarter wealth management revenue rose 16% to $6.66 billion on higher interest income, exceeding the $6.5 billion estimate of analysts surveyed by FactSet. The division took in $90 billion in net new client assets. The bank’s Wall Street division fared less well. The institutional securities business posted an 8% drop in revenue to $5.65 billion, driven by declines in trading. While equities trading generated $2.55 billion in revenue, topping the $2.37 billion FactSet estimate, fixed income produced $1.72 billion, which was well below the $1.99 billion estimate. Investment banking revenue of $1.08 billion was roughly unchanged from a year ago and essentially matched analysts’ expectations.
Moreover, Asset management revenues related with Wealth Management decreased 2% from a year ago reflecting lower asset levels primarily due to declines in the markets. Transactional revenues decreased 2% excluding the impact of mark-to-market gains on investments associated with certain employee deferred compensation plans compared to losses in the prior year quarter. The decrease was due to lower client activity compared to a year ago
MS in the second quarter of FY 23 has reported the adjusted earnings per share of $1.24, beating the analysts’ estimates for the adjusted earnings per share of $1.15, according to Refinitiv estimate. The company had reported the adjusted revenue growth of 2 percent to $13.46 billion in the second quarter of FY 23, beating the analysts’ estimates for revenue of $13.08 billion.
Additionally, the Firm reauthorized a multi-year repurchase program of up to $20 billion of outstanding common stock without a set expiration date. The company has declared a $0.85 quarterly dividend per share, representing an increase of 7.5 cents per share, payable on August 15, 2023 to common shareholders of record on July 31, 2023.
On the other hand, Gorman announced in May that he would step down within a year. Morgan Stanley’s board will focus on the selection Gorman’s successor at its summer and fall meetings. Among the three top candidates are Ted Pick, the company’s co-president who leads its investment banking and trading arm, and co-president Andy Saperstein, who runs wealth management.