Jul 20, 1:38 PM EDT

Morgan Stanley earns $1.67 billion in 2Q, helped by trading and wealth management businesses


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NEW YORK (AP) -- Morgan Stanley's second-quarter results topped Wall Street's expectations Monday, as the investment bank's trading and wealth management businesses helped lift revenue.

While Morgan Stanley's profits fell 8.5 percent, that drop was largely because to a tough comparison to the year before, when the bank had a one-time tax benefit. Excluding that year-earlier boost, the bank saw growth in all three of its core businesses in the latest quarter.

"We delivered a strong quarter across each of our businesses," Morgan Stanley CEO James Gorman said in a statement.

Morgan Stanley's institutional securities division, which includes its investment bank, and its stock, bond and commodities trading desks, did well. Equity sales and trading revenues totaled $2.3 billion in the quarter, compared with $1.8 billion a year earlier, as client activity rose. Fixed income and commodities trading net revenues climbed to $1.3 billion from $1 billion.

The increase in trading revenue was notable for a couple reasons. Morgan Stanley was alone among the big banks - including JPMorgan Chase and Citigroup as well as its main competitor Goldman Sachs - to report a jump in trading revenue.

Secondly, the bank did well in trading even though it has been shifting under Gorman to steadier businesses like wealth and asset management and away from the volatility of markets trading.

Its wealth management unit, which includes the old Smith Barney franchise, reported net revenue of $3.88 billion versus $3.7 billion a year earlier, helped by higher asset management fees.

Overall, Morgan Stanley earned $1.67 billion in the quarter, down from $1.82 billion a year earlier. On a per-share basis, that amounted to 85 cents.

Total net revenue at the bank rose to $9.74 billion, up from $8.61 billion. Wall Street had expected revenue of $9.19 billion in the latest quarter.

Morgan Stanley's results also included a six-cent per share adjustment that is tied to the value of the firm's underlying debt. Excluding that adjustment, Morgan earned 79 cents per share, which was well ahead of the 74 cents that analysts were expecting.

Shares of Morgan Stanley rose 11 cents, or 0.3 percent, to $40.32 in midday trading. Shares are up 4 percent so far this year.

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