(New York) US investment bank Morgan Stanley on Tuesday reported net profit down 14% to $2 billion in the second quarter, due to a “difficult” environment for certain consulting activities while wealth management broke records.
“The quarter began with macroeconomic uncertainties and subdued client activity, but ended on a more constructive note,” Morgan Stanley chief James Gorman said in a statement.
The institution completed it “with a strong capital position”, he argued?
“We remain confident in our ability to grow in different market environments, while maintaining a strong capital position,” he added.
Positive words that pleased Wall Street where the title took 6.53% to 92 dollars at 12:40 p.m. (Eastern time).
“The talk of the day with the banks is it’s better than feared,” commented Interactive Brokers analyst Steve Sosnick.
“Unless an announcement is totally disappointing, everything is taken as good news. Right now, we are in the full buy-in phase,” he added.
The bank’s turnover increased by 2% over one year to 13.46 billion dollars, marked by a record in the wealth management branch where the net amount of new assets deposited by customers reached 90 billion dollars.
But, similar to the first quarter, Morgan Stanley suffered from lack of activity in the mergers and acquisitions sector.
The investments arm, which essentially includes asset management, also lost ground in the wake of the decline in asset values compared to the same period in 2022 and the “cumulative effect of withdrawals”.
“While we are in the traditional summer downturn and it is unclear whether the positive trends will continue in the near term, current conditions are encouraging,” said Sharon Yeshava, Chief Financial Officer, in a call with analysts. “Definitely for the medium-term outlook and especially for 2024.”
In this context, Morgan Stanley bought back $1 billion in treasury shares over the quarter, or just over a third of the envelope used a year earlier. A new $20 billion buyback program has been authorized with no expiry date.
The second quarter was also marked by an exceptional charge of $308 million for layoffs and integration expenses of $99 million. The bank had 82,000 employees at the end of June, up from nearly 78,400 a year earlier.
Mr. Gorman confirmed to analysts his intention to step down as chief executive before the next general meeting of shareholders.
“We are very fortunate to have three very good internal candidates that the board continues to evaluate,” said the one who plans to remain “executive chairman for a while”.
