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Morgan Stanley (MS) on Wednesday reported second quarter 2017 earnings before the bell beating analyst expectations. $MS followed the other major banks with solid wealth and institutional revenues.

Earnings: Net revenues of $9.5 billion and earnings per share of 87 cents, versus $8.9 billion and 75 cents per share in the year-ago quarter. Beating the FactSet consensus estimate of 76 cents per share on $9.1 billion of revenue.

Reaction:  Morgan Stanley NYSE: $MS $46.51 +1.37 (+3.03%)

Chairman and CEO James Gorman said MS operated in a "subdued trading environment", however revenues from institutional securities, wealth management, and investment management were all higher than a year ago.

"Our second quarter results demonstrated the resilience of our franchise in a subdued trading environment. Our wealth management business produced a 25% margin and our strong investment banking results attest to the diversity of our global business. We continue to deliver on our strategic goals and grow shareholder returns." said James Gorman

Banking Segments

  • Investment banking revenues were $1.4 billion compared to $1.1 billion a year ago,
  • Sales and trading fell to $3.2 billion, versus $3.3 billion in 2016.
  • Wealth management revenues came in at $4.2bn, up from $3.8b billion a year ago
  • Institutional securities net revenues rose to $4.8 billion from $4.6 billion a year ago,
  • Investment management net revenues increased to $665 million from $583 million a year ago.

Share Repurchases and Dividends

MS BoD declared a dividend of $0.25 per share. The quarterly dividend is payable on August 15 2017 to shareholders of record on July 31, 2017. This represents a 25% hike from the prior payout. 

During the reported quarter, Morgan Stanley bought back around 12 million shares for nearly $500 million. This was part of the company's 2016 capital plan.

As of Jun 30, 2017, book value per share was $38.22, up from $36.29 as of Jun 30, 2016. Tangible book value per share was $33.24, up from $31.39 as of Jun 30, 2016.

Capital Ratio

Morgan Stanley’s Tier 1 capital ratio Advanced (Transitional) was 18.9%, up from 18.8% in the year-ago quarter. Tier 1 common equity ratio Advanced (Transitional) was 16.6% compared with 16.8% in the prior-year quarter.

Source: MS, AlphaStreet

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