Home Finance Morgan Stanley (MS) 2Q 2022 earnings miss

Morgan Stanley (MS) 2Q 2022 earnings miss

by Enochadmin

Morgan Stanley posted second-quarter outcomes Thursday that had been beneath analysts’ expectations, harm by weaker-than-expected funding banking income.

This is what the corporate reported in contrast with what Wall Road was anticipating, primarily based on a survey of analysts by Refinitiv:

  • Earnings per share: $1.39 vs. $1.53 anticipated
  • Income: $13.13 billion vs. $13.48 billion anticipated

Revenue dropped 29% to $2.5 billion, or $1.39 per share from $3.51 billion, or $1.85 per share, a 12 months in the past, the New York-based financial institution mentioned in a release. Income fell 11% to $13.13 billion from $14.8 billion, pushed by the steep 55% decline in funding banking income.

The outcomes affirm what some analysts had feared for Morgan Stanley, which runs one of many bigger fairness capital markets operations on Wall Road. The agency’s funding banking division produced $1.07 billion in second-quarter income, $400 million beneath analysts’ $1.47 billion estimate that itself had been ratcheted down in latest weeks.

Shares of the financial institution fell practically 1% in late-morning buying and selling after earlier hitting a brand new 52-week low of $72.05.

Wall Road banks are grappling with a collapse in IPOs and debt and fairness issuance this 12 months, a pointy reversal from the offers increase that drove outcomes final 12 months. The change was triggered by broad declines in monetary property, pessimism over the potential for a recession and the Russian invasion of Ukraine.

“General, the agency delivered a stable quarter in what was a extra risky market setting than we now have seen for a while,” CEO James Gorman mentioned within the launch. He added that good buying and selling outcomes “helped partially counter weaker funding banking exercise.”

Equities buying and selling produced $2.96 billion in income within the quarter, above the $2.77 billion estimate, whereas fastened revenue buying and selling income of $2.5 billion handily exceeded the $1.98 billion estimate.

The agency’s big wealth administration division produced $5.74 billion in income, beneath the $5.99 billion estimate, as decrease asset values minimize administration charges.

Funding administration income fell 17% to $1.41 billion from final 12 months.

Morgan Stanley co-President Ted Decide mentioned final month that markets can be dominated by concern over inflation and recession in a interval of transition after practically 15 years of easy-money insurance policies by central banks got here to an finish.

“The banking calendar has quieted down a bit as a result of persons are making an attempt to determine whether or not we’ll have this paradigm shift clarified in the end,” Decide mentioned.

Morgan Stanley’s inventory has dropped 24% this 12 months by way of Wednesday, worse than the 19% decline of the KBW Financial institution Index.

JPMorgan additionally reported disappointing second-quarter earnings on Thursday, as the most important U.S. financial institution by property, grew its reserves for dangerous loans and suspended its inventory buybacks as its financial outlook dims.

Morgan Stanley, in the meantime, repurchased $2.7 billion of its personal inventory through the newest quarter and its board has accepted a brand new $20 billion program.

Wells Fargo and Citigroup are scheduled to report outcomes Friday, whereas Financial institution of America and Goldman Sachs put up Monday.

Correction: Morgan Stanley earned $3.51 billion, or $1.85 per share, within the second quarter of final 12 months. An earlier model misstated the outcomes.

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