Morgan Stanley Investment Banking Hit by Capital Markets Seizing Up

Morgan Stanley reported worse than expected second quarter earnings before the bell Thursday on lower-than-expected revenue from investment banking. $MS released earnings ahead of major competitor Goldman Sachs and four of the largest U.S. lenders Wells Fargo, Citigroup and PNC. Morgan Stanley’s trading segment helped out as fixed-income revenue surged amid heightened volatility and clients repositioning their books as interest rates surged higher across the curve.

Morgan Stanley

Morgan Stanley NYSE: MS Reported Before Open Thursday

$1.39 Missed $1.57 EPS AND $13.3 Billion Missed $13.3 Billion Forecast in Revenue

MS Q2 2022 Earnings

  • Morgan Stanley revenue slid 11% to $13.1 billion, compared with estimates of $13.3 billion.
  • Net income was $1.39 per share, or $1.44 on an adjusted basis. Analysts were expecting $1.57.
  • Wealth management reported revenue of $5.74 billion in the second quarter, down 5.9% from a year earlier.
  • Net new assets fell 26% to $52.9 billion.
  • Investment-management posted $1.41 billion in revenue, down 17%.
  • Trading revenue of $5.46 billion surpassed the $5.1 billion average estimate, and up from $4.51 billion a year ago. Powered by a 49% jump in fixed-income revenue, which climbed to $2.5 billion.
  • Revenue from equity underwriting plunged to $148 million
  • Debt underwriting declined 49% to $326 million.
  • Advisory revenue fell 9.9% to $598 million.

“It was a very solid quarter in the face of market volatility,” Chief Financial Officer Sharon Yeshaya said in an interview. “Market activity and client activity should help support the level in equities and fixed-income businesses. But the volatility delays some of the pipeline to convert on the investment-banking side, especially on the M&A side.”

E Trade and Eaton Vance Aquisition’s

Morgan Stanley’s acquisition of E*TRADE continues reward the banks as the record-setting stock market is drawing in waves of new capital to the online brokerage company. The bank spent $13 billion to acquire E-Trade to further its reach with the mass affluent, and $7 billion to buy Eaton Vance to bulk up its investment management business.

On Feb. 20, 2020, Morgan Stanley agreed to acquire E-Trade Financial (ETFC) in a $13 billion, all-stock deal. The Wall Street investment bank said the purchase would add E-Trade’s consumer-oriented business to its advisor-driven model. The deal closed in Q4, 2020

Wealth management, which Morgan Stanley expanded through the acquisition of ETrade, increased revenues.

From The TradersCommunity Research Desk

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