Here’s what Morgan Stanley’s Q2 earnings report tells us

By: Wajeeh Khan
Wajeeh Khan
Wajeeh is an active follower of world affairs, technology, an avid reader, and loves to play table tennis in… read more.
on Jul 15, 2021
  • Morgan Stanley beats Wall Street estimates in the fiscal second quarter.
  • The investment bank doubled its dividend for Q3 to 70 cents a share.
  • Shares of the company were roughly 1% down in premarket trading.

Morgan Stanley (NYSE: MS) reported its financial results for the second quarter on Thursday that beat Wall Street estimates. The company’s trading revenue, however, missed expectations by a significant margin. Despite market-beating results, shares of the investment bank were about 1% down on Thursday morning.

Financial performance

Morgan Stanley said its net income came in at $3.51 billion in the second quarter that translates to $1.85 per share. In the comparable quarter of last year, its net income was capped at $3.20 billion or $1.96 per share.

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The American multinational generated $14.76 billion of revenue in Q2 that represents an 8.0% annualised growth. According to FactSet, experts had forecast the company to post $13.97 billion of revenue and $1.66 of EPS.

At the time of writing, Morgan Stanley is valued at $172 billion and has a price to earnings ratio of 12.14.

Dividend and share repurchase

The earnings report comes only weeks after Morgan Stanley cleared the U.S. Federal Reserve’s stress test and doubled its dividend to 70 cents per share for the third quarter.

According to CEO James Gorman, the investment bank will buy back $12 billion worth of its own shares. Gorman also expressed confidence that the New York-based financial services firm was “very well positioned to drive further growth”.

Revenue from individual business segments

Other prominent figures in Morgan Stanley’s earnings report on Thursday include a year over year increase of 29.6% in wealth management revenue, a 13.5% decline in institutional securities revenue, and a massive 90% growth in investment management revenue.

Equity underwriting revenue jumped 21.5%, and fixed income underwriting tanked 9.5%. Trading revenue in Q2 slipped 31% on an annualised basis and was the only segment that missed forecasts.

In separate news, the Bank of New York Mellon also published its quarterly earnings report on Thursday.

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