Morgan Stanley earnings plunge despite asset sales
Morgan Stanley on Wednesday said quarterly earnings dropped by more than 50 percent on trading losses and a slowdown in investment banking, even after the investment bank realized $1.43 billion of pretax gains from asset sales.
Morgan Stanley’s shares dropped more than 4 percent as analysts questioned the sustainability of the bank’s earnings, which this quarter came mainly from selling businesses.
The second-largest U.S. investment bank reported income from continuing operations of $1.03 billion, or 95 cents a share, for its fiscal second quarter, ended May 31, down from $2.36 billion, or $2.45 a share, a year earlier.
Net revenue fell 38 percent to $6.5 billion from the same quarter last year.
“This has been an unusually stressed quarter,” Morgan Stanley Chief Financial Officer Colm Kelleher said in an interview with Reuters.
Some analysts said the investment bank’s core earnings were just a few pennies per share, falling far short of average analyst expectations of 92 cents.
Most of the company’s earnings came from two one-time items: a $698 million pretax gain from the sale of its Spanish wealth management business and a $732 million pretax gain from the secondary offering of MSCI Inc stock.
“If you have to go all the way to Spain to make numbers, it’s not good paydayloan. How many more rabbits do they have in their hat? What’s going to be the driver of earnings growth going forward?” said Matt McCormick, a stock analyst at Bahl & Gaynor Investment Counsel in Cincinnati.
Filed under: economics by TheDoor