Morgan Stanley Lower After Q3 Results
Morgan Stanley (NYSE: MS) released its fiscal third-quarter earnings results prior to the opening bell on Wednesday. The Wall Street investment bank reported a loss which was the result of an accounting change related to debt valuation. Adjusted earnings showed a profit for the period.
Strength was seen in Morgan Stanley's institutional securities segment, with revenues rising 20 percent, excluding the debt valuation adjustment, to $1.38 billion.
The investment bank's fixed income underwriting business showed strong growth, with revenues doubling to $431 million.
Fixed income and commodities sales and trading revenues rose 36 percent in the third-quarter to $1.5 billion.
The firm's advisory business, however, fell 18 percent to $339 million. Equity underwriting revenue fell, registering a decline of around 17 percent to $199 million.
Morgan Stanley's asset management business saw revenues more than triple to $631 million and global wealth management revenues rose three percent to $3.34 billion.
James Gorman, chairman and CEO of Morgan Stanley, said, "The rebound in Fixed Income & Commodities sales and trading indicates that clients have re-engaged after the uncertainty of the rating review in the previous quarter."
Gorman also addressed Morgan Stanley's deal with Citigroup (NYSE: C) to acquire full control of the Morgan Stanley Smith Barney wealth management joint venture. "We are beginning to unlock the full potential of the Global Wealth Management franchise, having increased our ownership of, and agreed on a purchase price for the rest of, Morgan Stanley Wealth Management," he said.
For the third-quarter, the company reported a net loss of $1.05 billion or $0.55 per share, compared to net profit of $2.15 billion or $1.15 per share, in the year ago period. Excluding the impact of the debt valuation adjustment, earnings in the quarter were $561 million or $0.28 per share, versus $64 million or $0.02 per share, in last year's third-quarter. This exceeded Wall Street consensus earnings estimates of $0.24 per share.
Adjusted net revenues, which does not take into account the debt valuation adjustment, were up 18 percent to $7.55 billion. This also easily beat analysts' consensus revenue estimates of $6.36 billion.
Despite the strong adjusted results in the period, Morgan Stanley shares are lower on Thursday. At last check, the stock had lost a little more than two percent to $18.10. Shares have rebounded sharply from their worst levels of the year seen in June and July when the stock traded below $13.00. Year-to-date, Morgan Stanley has now climbed a little less than 20 percent. Over the last 52-weeks, the stock is up around 9 percent.
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