Morgan Stanley profits jump on trading and investment banking strength

Morgan Stanley HQ

Morgan Stanley profits jumped in the second quarter as it today reported a strong trading performance and firmer investment banking revenues.

Profits grew by a third compared with 2017 to hit $2.4bn (£1.8bn), making Morgan Stanley the latest Wall Street bank to comfortably beat analyst expectations. Revenues grew by 11 per cent year-on-year to reach $10.6bn.

Wall Street banks have gained from recent market volatility following trade tensions, as investors reposition their portfolios. Revenues in Morgan Stanley's sales and trading arm duly grew from $3.2bn a year ago to $3.8bn, an 18 per cent increase. Fixed income trading operations increased by 16 per cent thanks to commodities and credit performance, while equity sales and trading revenues increased by 13 per cent, with the bank crediting its financing business.

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Investment banking revenues also increased strongly, with equity underwriting revenues soaring by a third to hit $541m. Advisory revenues rose by a fifth as mergers and acquisitions volumes rose "across all regions".

The higher revenues drove pay across the group up by $300m to $4.6bn, with a similar increase in non-compensation costs of $2.9bn which the bank said reflected higher volume-driven expenses.

James Gorman, Morgan Stanley's chairman and chief executive, said revenue and earnings growth had been "robust" across all business arms and in every region.

"The second quarter performance reflected active markets and healthy client engagement," he added.

Growth was less explosive in Morgan Stanley's other arms, with revenues in wealth management rising from $4.2bn to $4.3bn. Total client assets under management reached $2.4 trillion, with client assets in fee-based accounts of $1.1 trillion at the end of the quarter.

In investment management assets under management rose to $474bn, up by almost $40bn at the same time last year. Investment management revenues rose by four per cent to $691m.

Read more: Morgan Stanley becomes the latest US bank to report record profits

Full story: Morgan Stanley profits jump on trading and investment banking strength: City A.M.

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