On Thursday, it said its second-quarter profit was down 29% from a year ago, reflecting a decline in corporate deal closings.
The New York Bank earned $2.5 billion, or $1.39 per share. Analysts polled by FactSet had expected $1.56 per share. Revenue fell 11% to $13.1 billion in the first quarter, also beating expectations of $13.39 billion.
Investment banking revenue, including merger and acquisition fees, was down 55%. Weakness in the bond and stock markets high inflationprompting corporate executives to halt plans to make deals or go public.
CEO James Gorman said on a conference call with analysts that the batch of new deals expected is strong, but the bank will need more confidence among corporate leaders and less market volatility to actually complete them.
However, wild market volatility during the quarter was good for Morgan Stanley traders, whose returns are up 21% from a year ago.
Morgan Stanley also said it set aside $200 million this quarter to settle a widespread regulatory investigation into bank employees’ use of unauthorized personal devices.
& Co. paid $200 million to organizers last year to solve a similar issue. JPMorgan has admitted that it failed to track employees’ personal devices that circumvented record-keeping requirements.
Morgan Stanley’s return on tangible equity, a measure of how efficiently it is using shareholder money, was 13.8% for the quarter.
Morgan Stanley shares fell 0.4 percent on Thursday and are down 24 percent so far this year.
Although Morgan Stanley is a big player in the trading and deal-making business of Wall Street, he is usually protected in periods of volatility by his giant money management arm.
Wealth management revenue came in at $5.7 billion in the first quarter, down 6% from a year earlier. That unit accounted for 44% of the company’s total revenue.
Morgan Stanley’s retail customers reached 7.8 million at the end of June, up from 7.6 million in the first quarter. The company averaged 880,000 daily retail trades, down 13% from the first quarter. Investment Management returns were down 17% from the previous year.
The bank said last month that it planned to buy back $20 billion in shares without an expiration date. It repurchased $2.7 billion in the second quarter.
write to Charlie Grant at [email protected]
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It appeared on July 15, 2022, print edition as “Morgan Stanley reports 29% decline in profit.”
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