Morgan Stanley posts Q2 loss, but beats estimates

Stan my man!

Morgan Stanley on Thursday announced a second-quarter loss as it took a hefty charge on the restructuring of an investment by Mitsubishi Financial, but still managed to beat analysts’ estimates. For the three months ended June 30, the investment bank posted a loss of $558 million, or a $0.38 per share, compared with earnings of $1.58 billion, or $1.09 per share, a year ago. Total revenues for the quarter rose 17% to $9.28 billion. Analysts had anticipated a wider loss of $0.62 per share, on revenues of $8.04 billion.

“While global markets remained challenging this quarter, the firm delivered higher year-over-year revenues across our three major business segments,” said president and CEO, James P. Gorman.

Indeed, the firm’s institutional securities segment, which includes investment banking and trading, posted revenues of $5.2 billion, up 15% from $4.5 billion a year ago, and pre-tax profits of $1.5 billion, down 9% from $1.6 billion a year ago. Equity sales and trading revenues rose to $1.9 billion, compared to $1.4 billion a year ago, reflecting higher results in the derivatives and prime brokerage businesses, the company said. Underwriting revenues increased 57% to $940 million for the quarter, with equity underwriting revenues rising 56% year-over-year, and revenues from fixed income underwriting hiking 59% - the highest since the financial crisis, reflecting an improving economy.

The quarterly results also included a $1.7-billion charge, or $1.02 per share, relating to the conversion of $7.8-billion worth of preferred stock held by Japan’s Mitsubishi UFJ Financial Group. Converting the stake into common stock will save Morgan Stanley $780 million a year in preferred-dividend payments and improve the bank’s capital ratios. For the recent quarter, Morgan Stanley reported a Tier 1 capital ratio of 14.6%, up 290 basis points and the best amongst its peers.

Morgan Stanley (MS : NYSE : US$24.20), Net Change: 2.48, % Change: 11.42%, Volume: 65,528,239

Canaccord Genuity Inc. is a global investment banking and institutional brokerage firm. Their website is www.canaccordgenuity.com.

For disclosures of any equities mentioned here please see: http://www.canaccordgenuity.com/en/ODD/pages/disclosures.aspx

About the Author

Canaccord Genuity Inc. is a global investment banking and institutional brokerage firm. Their website is www.canaccordgenuity.com.

For disclosures of any equities mentioned here please see: http://www.canaccordgenuity.com/en/ODD/pages/disclosures.aspx.

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