Morgan Stanley beats Q2 expectations, but profit and revenue fell

Morgan Stanley (NYSE: MS) reported second quarter unaudited financials on Wednesday, pushing its shares about 2% up in the morning trading. Net revenues of $8.9 billion and earnings per diluted share of $0.75 beat lowered analysts’ expectation of 2Q, average estimate of net revenue $8.3 billion and earning per share of $0.59, according to Yahoo Finance.

Yet, Morgan Stanley’s net income fell to $1.58 billion in the current quarter, from $1.81 billion of the quarter ended in June 30, 2015. Its return on average common equity declined from 9.9% to 8.3%.

James P. Gorman, Chairman and Chief Executive Officer, said, “Our results this quarter reflect solid performance in an improved but still fragile environment. In the midst of market uncertainty, we maintained our leadership positions across our core franchises and continued our focus on prudent risk management and judicious expense control. We remain committed to executing for our clients and delivering on our strategic priorities for our shareholders.”

The consolidated income statement showed that trading revenue inclined by 33% to $2.75 billion from $2.07 billion in the previous quarter, a sign of recovery, even though it decreased 8% from the second quarter of 2015. Its investment banking increased only 11% from previous quarter but fell by 24% from the second quarter of 2015, which was the weakest performance in investment banking among the big Wall Street banks, according to calculations by RBC Capital Markets.

The bank increased its pre-tax profit margin to 28% from 22% in the previous quarter, maintaining the same level as the second quarter of 2015.

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