Morgan Stanley profits soar as economy grows

 
Tim Wallace
Follow Tim
PROFITS grew in all of Morgan Stanley’s business lines in the last three months, the US investment bank said yesterday.

Trading volumes increased in equities and bonds, wealth management returns improved and underwriting profits improved.

The bank reported a profit of $802m (£527m) in the second quarter, up 42 per cent on the same period of 2012.

Total revenues rose 17 per cent to $8.3bn, with investment banking revenue up 18 per cent to $1.3bn, trading inflows up 17 per cent to $2.9bn and commissions up 17 per cent to $1.2bn.

Meanwhile costs were kept under control with non-compensation expenses up 10 per cent on the year at $2.6bn. The professional services bills and costs from information processing and communications fell by three per cent and five per cent respectively, while brokerage and exchange fees increased 13 per cent on the year.

Pay increased 13 per cent to $4.1bn, dragging the pay to revenue ratio down from 52 per cent to 48 per cent.

Return on average common equity improved from 3.7 per cent to 5.2 per cent, while its tier one capital ratio fell from 13.6 per cent to 11.8 per cent.

“This quarter, we saw significant year-over-year revenue growth in each of our five major business units and higher year-over-year profitability,” said CEO and chairman James Gorman.

The bank’s shares jumped 4.71 per cent higher on the day, aided by the bank’s announcement of a $500m share buyback.