Morgan Stanley (NYSE:MS) announced Thursday a loss in its second quarter earnings as it took a $1.7 billion hit due to the restructuring of an investment in Mitsubishi UFJ Financial Group, but still mnanaged to beat estimates.
For the three months ending June 30, the investment bank posted a loss of $558 million, or a $0.38 per share, compared to earnings of $1.58 billion, or $1.09 per share, a year ago.
The company's results included a $1.7 billion charge, or $1.02 per share, relating to the conversion of $7.8 billion worth of preferred stock held by Japan's Mitsubishi UFJ Financial Group.
In the quarter, earnings attributable to Morgan Stanley, which excludes the Mitsubishi charge, fell to $1.19 billion from $1.44 billion a year earlier.
Total revenues for the quarter rose 17% to $9.28 billion. Analysts had anticipated a wider loss of $0.62 per share, on revenues of $8.04 billion.
"While global markets remained challenging this quarter, the firm delivered higher year-over-year revenues across our three major business segments," said president and CEO, James P. Gorman.
"We also completed the previously announced preferred stock conversion with [Mitsubishi], resulting in a one-time, non-cash charge this quarter . . . and boosting the Firm's Tier 1 common ratio to an industry-leading level."
Morgan Stanley's Basel I common ratio rose 290 basis points to 14.6%, including 270 basis points attributed to the stock conversion.
The firm's institutional securities segment, which includes investment banking and trading, posted revenues of $5.2 billion, up 15% from $4.5 billion a year ago, and pre-tax profits of $1.5 billion, down 9% from $1.6 billion a year ago.
Equity sales and trading revenues rose to $1.9 billion, compared to $1.4 billion a year ago, reflecting higher results in the derivatives and prime brokerage businesses, the company said.
Fixed income and commodities sales and trading revenues slipped to $2.1 billion from $2.3 billion a year ago, as increased revenues from credit products were offset by lower results in commodities.
Underwriting revenues increased 57% to $940 million for the quarter, with equity underwriting revenues rising 56% year-over-year, and revenues from fixed income underwriting hiking 59% - the highest since the financial crisis, reflecting an improving economy.
Advisory fees rose to $533 million for the quarter, up 85% over the same period last year, reflecting higher revenues across all regions.
The global wealth management segment, which was driven by higher asset management revenues, saw net revenues of $3.48 billion, up 13%, and pre-tax earnings of $322 million compared to $207 million in the second quarter of 2010.
At the quarter's end, total client assets were $1.7 trillion, with net new assets for the quarter totaling $2.9 billion.
Morgan Stanley's asset management segment made $645 million in net revenues, up 57% year-over-year, and pre-tax income of $165 million, from an $86 million loss in the year-ago period, as distribution and administrative fees rose 12% to $2.11 billion.
Gains were also seen on principal investments in its real estate investing business, and higher results in the traditonal asset management business. Assets under management or supervision of $296 billion increased from $244 billion a year ago.
In other news, Morgan Stanley, whose stock on the New York Stock Exchange rose 7.18% to trade at $23.28 as of 11:02 am EDT, also announced its board of directors approved a 5-cent quarterly dividend, payable on August 15.
For the three months ending June 30, the investment bank posted a loss of $558 million, or a $0.38 per share, compared to earnings of $1.58 billion, or $1.09 per share, a year ago.
The company's results included a $1.7 billion charge, or $1.02 per share, relating to the conversion of $7.8 billion worth of preferred stock held by Japan's Mitsubishi UFJ Financial Group.
In the quarter, earnings attributable to Morgan Stanley, which excludes the Mitsubishi charge, fell to $1.19 billion from $1.44 billion a year earlier.
Total revenues for the quarter rose 17% to $9.28 billion. Analysts had anticipated a wider loss of $0.62 per share, on revenues of $8.04 billion.
"While global markets remained challenging this quarter, the firm delivered higher year-over-year revenues across our three major business segments," said president and CEO, James P. Gorman.
"We also completed the previously announced preferred stock conversion with [Mitsubishi], resulting in a one-time, non-cash charge this quarter . . . and boosting the Firm's Tier 1 common ratio to an industry-leading level."
Morgan Stanley's Basel I common ratio rose 290 basis points to 14.6%, including 270 basis points attributed to the stock conversion.
The firm's institutional securities segment, which includes investment banking and trading, posted revenues of $5.2 billion, up 15% from $4.5 billion a year ago, and pre-tax profits of $1.5 billion, down 9% from $1.6 billion a year ago.
Equity sales and trading revenues rose to $1.9 billion, compared to $1.4 billion a year ago, reflecting higher results in the derivatives and prime brokerage businesses, the company said.
Fixed income and commodities sales and trading revenues slipped to $2.1 billion from $2.3 billion a year ago, as increased revenues from credit products were offset by lower results in commodities.
Underwriting revenues increased 57% to $940 million for the quarter, with equity underwriting revenues rising 56% year-over-year, and revenues from fixed income underwriting hiking 59% - the highest since the financial crisis, reflecting an improving economy.
Advisory fees rose to $533 million for the quarter, up 85% over the same period last year, reflecting higher revenues across all regions.
At the quarter's end, total client assets were $1.7 trillion, with net new assets for the quarter totaling $2.9 billion.
Morgan Stanley's asset management segment made $645 million in net revenues, up 57% year-over-year, and pre-tax income of $165 million, from an $86 million loss in the year-ago period, as distribution and administrative fees rose 12% to $2.11 billion.
Gains were also seen on principal investments in its real estate investing business, and higher results in the traditonal asset management business. Assets under management or supervision of $296 billion increased from $244 billion a year ago.
In other news, Morgan Stanley, whose stock on the New York Stock Exchange rose 7.18% to trade at $23.28 as of 11:02 am EDT, also announced its board of directors approved a 5-cent quarterly dividend, payable on August 15.
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