Morgan Stanley Earnings Ride Trading Revenues

Banking, finance, and taxes

Published: July 20, 2015 9:15 am

Last Updated: April 28, 2020 2:00 am

Source: courtesy of Morgan Stanley

Morgan Stanley (NYSE: MS) reported second-quarter 2015 results before markets opened Monday. The big bank reported adjusted diluted earnings per share (EPS) of $0.79 on revenue of $9.6 billion. In the same period a year ago, the bank reported EPS of $0.58 on revenue of $8.5 billion. Second-quarter results also compare to the consensus estimates for adjusted EPS of $0.74 on revenue of $9.1 billion.

Quarterly revenues exclude a debt valuation adjustment (DVA) totaling $119 million, compared with an adjustment of $61 million in the year-ago quarter. The bank also posted a tax benefit of $609 million in the second quarter of last year.

Equity sales and trading net revenues rose from $1.8 billion a year ago to $2.3 billion in the first quarter, and fixed income and commodities sales and trading net revenues rose from $1.0 billion to $1.3 billion.

The bank’s annualized return on average common equity from continuing operations was approximately 9.9% in the most recent quarter, or 9.1% excluding DVA.

Morgan Stanley’s Basel III common equity tier 1 ratio at the end of June was 14% and its tier 1 risk-based capital ratio was about 15.7%. The bank’s tangible book value per common share at the end of the quarter was $29.54, based on approximately 2 billion shares outstanding.

The bank repurchased approximately $625 million of its common stock, or approximately 16 million shares, in the second quarter.

The bank did not provide guidance in its earnings release. The consensus estimate for third-quarter adjusted EPS is $0.72 on revenues of $8.83 billion. For the full year, the consensus calls for EPS of $2.99 on revenues of $36.76 billion.

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The bank’s CEO said:

We delivered a strong quarter across each of our businesses, through client-focused execution, expense discipline and prudent risk management. We remain focused on delivering the long-term value of this franchise.

Shares traded up about 2% in the premarket Monday to $41.02. The current 52-week trading range is $31.12 to $40.26. Thomson Reuters had a consensus analyst price target of $40.67 before the results were announced.