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Morgan Stanley beats estimates on higher trading revenue
[NEW YORK] Morgan Stanley reported a better-than-expected quarterly profit on Wednesday, driven by gains in its fixed income and equities trading businesses, rounding up a strong earnings season for US banks.
JPMorgan Chase & Co, Bank of America Corp, Goldman Sachs Group Inc, Morgan Stanley and Citigroup Inc have all reported second-quarter earnings which beat expectations, with only Wells Fargo & Co missing estimates.
Banks are benefiting from increased market volatility due in part to escalating trade tensions causing investors to buy and sell assets to protect their portfolios and take advantage of opportunities. Morgan Stanley highlighted its equity financing business and a stronger performance in commodities and credit products.
Morgan Stanley said net income rose to US$2.4 billion in the quarter from US$1.8 billion a year ago. Earnings per share rose to US$1.30 from US$0.87 the year before, beating the average analyst expectation of US$1.11 per share, according to Thomson Reuters I/B/E/S data.
Shares in Morgan Stanley were up 2.9 per cent in premarket trading.
Chief executive officer James Gorman said the bank had seen strength across all its businesses and geographies.
"The second quarter performance reflected active markets and healthy client engagement," he said in a statement.
Net revenue from the bank's sales and trading business rose 18 per cent to US$3.8 billion, with fixed income and equity trading businesses recording gains of 12 per cent and 15 per cent.
Rival Goldman Sachs said on Tuesday its trading revenue rose 17 per cent, with bond trading showing a 45 per cent jump and equity revenue remaining flat in its second quarter.
Morgan Stanley's net revenue rose 12 per cent to US$10.6 billion, with institutional securities accounting for 54 per cent of the gains. Institutional securities business comprises the bank's investment banking and trading units.
The bank said net revenue at its wealth management business rose to US$4.3 billion from US$4.2 billion a year ago.