Morgan Stanley's Q2 income falls on lower revenue, beats estimates

Investment bank Morgan Stanley (MS) said Wednesday that its second-quarter net income fell 12%, reflecting lower revenues from underwriting securities and wealth management services.

Profit fell to $1.6 billion from $1.8 billion a year ago as total revenue declined 14% to $8.9 billion.

On an adjusted basis, earnings per share of 75 cents beat the 59 cents per share predicted by analysts polled by S&P Global Capital Intelligence.

Shares of Morgan Stanley rose 2.4% in late morning trading to $28.89.

“Our results this quarter reflect solid performance in an improved but still fragile environment," James Gorman, the company's chairman and CEO, said in a statement. "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."

The institutional securities unit, which provides underwriting services and mergers and acquisition advisory services, reported revenue of $4.6 billion, down 11% from a year ago due to lower demand for underwriting.

Higher levels of mergers and acquisitions drove its advisory services revenue 17% higher to $497 million. But equity underwriting revenue fell to $266 million from $489 million a year ago, a decline stemming from "significantly lower market volumes," it said. Fixed income underwriting revenue also tumbled to $345 million from $528 million due to lower bond and loan fees.

Equity sales and trading revenue dipped 8.7% to $2.1 billion as levels of activity in Asia fell. Fixed income and commodities trading revenue remained flat at $1.3 billion.

Revenue for the wealth management unit, which offers brokerage and investment advisory services, fell 2% to $3.8 billion.

The investment management unit, which provides securities and services in equity, fixed income, real estate and private equity to retail and business clients, reported a 22% revenue fall to $583 million. Assets under management totaled $406 billion.

Follow Paste BN media reporter Roger Yu on Twitter @ByRogerYu.