Industry & Business

Morgan Stanley’s quarterly profit falls by more than half

 Breaking News
  • Grand Canal Innovation District Planned For Dublin A far-reaching plan for the creation of the Grand Canal Innovation District in Dublin has been launched. The proposal from Trinity College Dublin is modelled on innovation districts in cities such as Boston, Toronto, Rotterdam and Barcelona. It will significantly strengthen Ireland’s competitive advantage when developing new indigenous companies or competing for foreign direct investment. [...]...
  • Heiton Buckley Unveils Newly Refurbished Mayo Branch Heiton Buckley, Ireland’s leading supplier of doors, floors, bathrooms, garden, plumbing and heating products, has officially unveiled its newly refurbished branch in Castlebar, County Mayo . GAA star, Andy Moran, CEO of Grafton Merchanting ROI, Patrick Atkinson, Heiton Buckley Castlebar Branch Manager, Mick Kane, and longtime customer Mick Duane officially cut the ribbon and kicked [...]...
  • Export Sales by Enterprise Ireland Client Companies Hit New Record Enterprise Ireland, the state agency responsible for helping Irish companies export to international markets, has announced that its clients recorded export sales of €22.71 billion in 2017, representing a 7 per cent increase on 2016. This is the highest level of export sales recorded in the history of the agency and the eighth-consecutive year of [...]...
  • BAM Wins €25 Million Contract to Build New Cheese Factory in Cork TINE Ireland, a subsidiary of the Norwegian dairy co-operative TINE, has awarded the construction of a new Jarlsberg® cheese production facility and administration building at Mogeely, County Cork, to BAM Ireland. The contract value is more than €25 million. TINE is Norway’s largest producer, distributor and exporter of dairy products with 11,400 members (owners) and [...]...
  • HBAN Scoops Major European Business Angel Network Award HBAN (Halo Business Angel Network), the all-island organisation responsible for the promotion of business angel investment, and a joint initiative of Enterprise Ireland and InterTradeIreland, was crowned Globally Networked Organisation 2018 at the recent EBAN (European Business Angel Network) Awards Ceremony held in Sofia, Bulgaria. HBAN was awarded the prominent European accolade in recognition of the significant [...]...

Morgan Stanley’s quarterly profit falls by more than half

April 18
15:00 2016

imagesMorgan Stanley’s (MS.N) quarterly profit fell by more than half as the Wall Street bank’s fixed-income trading and investment banking businesses took a hit from market volatility.

But the earnings handily beat expectations as the bank slashed compensation costs by nearly a fifth. Chief Financial Officer Jonathan Pruzan told Reuters that more cuts would take effect towards the end of the year and early next year.

Sliding commodity and oil prices, worries about the Chinese economy and uncertainty about U.S. interest rates made for wobbly markets in January and February, scaring off traders, investors and companies hoping to list on stock exchanges.

All of the big U.S. banks that have released first-quarter results have reported lower revenue from investment banking and trading, but earnings have generally topped low expectations.

“It must be said that if these markets were to continue as is, our goals would be extremely difficult to achieve and we would there for take additional appropriate actions,” Chief Executive James Gorman said on a conference call on Monday.

Morgan Stanley’s shares were up 0.9 percent at $26.00 in premarket trading. The stock fell about 21 percent in the quarter – the sharpest decline of any big U.S. bank.

The bank’s return on average common equity was 6.2 percent in the quarter ended March 31, well below the 10 percent target set by Gorman, who described the outcome as “not acceptable.”

Stephen Biggar, an analyst at Argus Research, said it would be “very difficult” to achieve the 10 percent target with revenue as muted as it was in the quarter.

Earnings applicable to common shareholders fell 54.4 percent to $1.06 billion, or 55 cents per share, from a year earlier, when the bank reported its most profitable quarter since the financial crisis.

Analysts on average had expected earnings of 46 cents per share, according to Thomson Reuters I/B/E/S.

Net revenue fell 21.3 percent to $7.79 billion, missing the average estimate of $7.87 billion.


Morgan Stanley, which like other banks has increasingly focused on expenses to make up for weak revenue, said it cut compensation costs by 18.6 percent in the quarter.

The bank said in January it was looking to save up to $1 billion by 2017 through technology and moving jobs to less expensive locations.

About 40 percent of Morgan Stanley’s back-office employees currently sit in lower-cost locations. Pruzan said the bank would like to increase this to 50 to 55 percent.

“The current numbers you see running through the expense line are from tightening up on discretionary spending,” he said.

“There are areas that are starting to take shape but we’ll see the actual savings from those towards the end of the year and next year.”

Adjusted revenue from fixed income and commodities trading slid 54.1 percent in the quarter, while equities trading revenue fell 9.3 percent.

Morgan Stanley has been shifting its focus away from more volatile areas such as bond trading and towards more stable and less capital-intensive businesses such as wealth management.

Wealth management revenue fell 4.3 percent to $3.67 billion during the quarter, but this accounted for 47 percent of net revenue compared with 39 percent in the same period of 2015.

Investment banking revenue, which includes fees from mergers and income from equity and debt underwriting, fell 18.4 percent to $1.11 billion.

Still, the business was now showing signs of life, Gorman said. “The M&A pipeline is strong and some green shoots suggest the equity underwriting calendar may open up,” he said.

Industrywide investment banking fees fell 29 percent in the period, the worst first-quarter since 2009, according to Thomson Reuters data.

Morgan Stanley ranked second globally in mergers advisory for the quarter, behind Goldman Sachs Group Inc, Morgan Stanley’s traditional rival, which will wrap up the earnings season for big U.S. banks on Tuesday.

Source: Reuters

About Author



Related Articles

New Subscriber

Subscribe Here


National Manufacturing Conference & Exhibition 2018

NIBRT Springboard Success Stories

Upcoming Events

  • No upcoming events
AEC v1.0.4