Morgan Stanley beats estimates for second-quarter profit on strong trading results

James Gorman, chairman and chief executive officer of Morgan Stanley, appears on CNBC’s Squawk Box at the 2020 World Economic Forum in Davos, Switzerland on Jan. 22nd, 2020.

Adam Galici | Getty Images

Morgan Stanley on Thursday posted second-quarter results that blew past analysts’ estimates on stronger-than-expected trading revenue.

The bank generated record profit of $3.2 billion, or $1.96 a share including an 8 cent per share expense tied to taxes, exceeding the $1.12 a share estimate of analysts surveyed by Refinitiv. Revenue climbed roughly 30% to a record $13.4 billion, a surprise increase that exceeded expectations by a full $3 billion.

Shares of the bank climbed 0.2% in premarket trading.

Morgan Stanley, which is essentially a global investment bank paired with a large wealth management business, benefited from one of Wall Street’s best trading quarters in years. The New York-based bank runs the biggest stock-trading business on Wall Street, as well as a bond trading division that punches above its weight.

Under Chief Executive Officer James Gorman, Morgan Stanley has emphasized its wealth management division. He doubled down on that with the acquisition of E-Trade, a deal that will close in the fourth quarter.

Morgan Stanley is the last of the six largest U.S. banks to report second-quarter earnings. JPMorgan Chase, Goldman Sachs and Citigroup beat analysts’ expectations on strong trading and investment banking results, while Wells Fargo posted its first loss since the financial crisis on loan loss reserves.

Here’s what Wall Street expected:

Earnings: $1.12 a share, 9.2% lower than a year earlier, according to Refinitiv.

Revenue: $10.3 billion, almost unchanged from a year earlier.

Wealth management: $4.12 billion, according to FactSet.

Trading: Equities $2.35 billion; fixed income $1.81 billion.

This story is developing. Please check back for updates.

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