Morgan Stanley investment banking business picks up trading slack

Morgan Stanley reported an 8 per cent year-on-year rise in revenues in the second quarter, as its investment banking division picked up some of the slack from a slowdown in trading.

The Wall Street bank posted revenue of $14.8bn, up from $13.7bn a year earlier and ahead of analysts’ estimates of $14bn, according to data compiled by Bloomberg. Earnings this quarter were flattered by the recent integration of online trading platform ETrade and money manager Eaton Vance which Morgan Stanley acquired last year. 

Morgan Stanley’s earnings per share came in at $1.85, down from $1.96 per share a year earlier. Net income was $3.5bn, up from $3.2bn a year ago.

Morgan Stanley benefited from higher fees in investment banking, though slightly less than rivals JPMorgan Chase and Goldman Sachs, which reported earnings on Tuesday.

Second-quarter revenues for Morgan Stanley from investment banking, which includes advising on corporate mergers as well as equity and debt underwriting, came in at $2.4bn, 15.8 per cent higher than a year ago. Analysts had expected $2.06bn.

By comparison, JPMorgan and Goldman reported year-on-year fee gains in investment banking of 25 per cent and 36 per cent, respectively. 

Wall Street banks have pivoted their focus to dealmaking amid a surge in mergers and acquisitions to counterbalance the slowdown in trading activity. Morgan Stanley earned revenues of $4.7bn in sales and trading in the second quarter, down 23 per cent year-on-year but ahead of market estimates for $4.4bn. 

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