Morgan Stanley Outperforms Expectations with Record Revenue

July 18, 2023: Morgan Stanley reported second-quarter earnings and revenue that exceeded analysts’ expectations, thanks to exceptional results from its wealth management division. However, The bank’s profit experienced a 13% decline due to lower trading results than the previous year and the impact of layoffs that resulted in $308 million in severance costs.

Here are the key highlights of Morgan Stanley’s second-quarter performance:

Earnings: The bank reported $1.24 per share, surpassing the Refinitiv estimate of $1.15 per share.

Revenue: Morgan Stanley generated $13.46 billion, outperforming the expected $13.08 billion.

Despite the dip in profit, the reliance on wealth management, under the leadership of CEO James Gorman, has been instrumental in providing steady earnings and boosting the company’s valuation compared to its peers. Gorman, who took the helm in 2010, has announced his plan to step down within a year, initiating a succession race within the organization.

Morgan Stanley’s shares have slightly increased this year, unlike the approximately 20% decline observed in the KBW Bank Index.

On the previous Friday, other major banks, including JPMorgan Chase, Citigroup, and Wells Fargo, also reported earnings that surpassed analyst expectations, supported by higher interest rates. Goldman Sachs, another key player in the financial sector, is scheduled to release its earnings on Wednesday.

James Gorman expressed satisfaction with the firm’s performance, acknowledging the challenging market conditions at the beginning of the quarter. However, by the end of the period, a more positive outlook prevailed. He highlighted the success in attracting client assets, with the Wealth and Investment Management division adding $100 billion in net new assets, bringing the year-to-date total to over $200 billion.

The bank’s Institutional businesses demonstrated resilience in navigating the market uncertainties. Morgan Stanley’s capital position remained robust, and the quarterly common dividend was raised for the second consecutive year.

The company’s second-quarter results showed net revenue of $13.5 billion and net income of $2.2 billion. Wealth Management achieved impressive results, with net new client assets reaching $90 billion and record net revenues of $6.7 billion.

Looking ahead, Morgan Stanley remains confident in its ability to grow in various market environments while maintaining a solid capital position. The positive performance, particularly in wealth management, signifies the bank’s resilience in uncertain market conditions and bodes well for its prospects.