Morgan Stanley profits rise on lower charge
US investment bank Morgan Stanley said Thursday it had swung to positive earnings due primarily to a favorable comparison with the year-ago period that included a large charge.
Some of the bank's trading and investment banking businesses suffered declines, while wealth management and asset management results strengthened.
Morgan Stanley reported net income of $958 million on revenues of $8.2 billion, up from a loss of $119 million on revenues of $6.9 billion in the year-ago period.
However, Morgan Stanley said the current batch of quarterly results were weaker when excluding some debt whose value fluctuates. Morgan Stanley last year took a charge of $2 billion due to the fluctuating value of this debt; this time, the charge came in at just $317 million.
Excluding this charge, Morgan Stanley revenues were $8.5 billion in the most recent quarter compared with $8.9 billion in the year-ago quarter and income from continuing operations came in at $1.2 billion compared with $1.4 billion a year ago.
Morgan Stanley said advisory revenues were down 19.8 percent due to lower levels of market activity, although equity underwriting revenues rose. The company also garnered higher revenues in debt underwriting.
Fixed income and commodities sales and trading revenues were just $1.5 billion compared with $2.6 billion in the year-earlier period. Revenues in equity sales and trading also declined.
But Morgan Stanley reported 48 percent higher global wealth management profits, a category that Morgan Stanley hopes to bolster with the purchase of Citigroup's remaining 35 percent stake in the business once it garners federal approval.
Morgan Stanley said its profits in asset management rose to $187 million from $128 million in the year-ago period.
Chief executive James Gorman said the company was looking forward to new business opportunities in Japan with its joint venture with Mitsubishi UFH Financial Group, given some of the shifts in Japan's economic policy.
Gorman gave a more bullish appraisal of market conditions compared with some banking executives.
"Looking forward, while the global environment continues to have moments of fragility, we believe the broad economic outlook for the next several years is stronger than in the recent past," Gorman said.
Morgan Stanley shares are down 0.1 percent in pre-market trading.