July 18 - Morgan Stanley posts a big profit gain in line with the biggest U.S. banks, boosted by trading revenues. Fred Katayama reports.
The biggest U.S. banks are reporting a solid second quarter, and Morgan Stanley just joined the party. Its earnings beat estimates, rising 42 percent to $802 million. While revenue grew across the board, equities trading and underwriting fared particularly well. Its fixed income and commodities trading revenue bounced back from the year before but fell further from a dismal first quarter. Those revenues were half that of archrival Goldman Sachs. And they fell short of UBS analyst Brennan Hawken's estimates. He said: "While Morgan Stanley's wealth management story is solid, we believe they need to show improved returns in fixed income commodities and currencies before they are likely to garner a higher multiple." Morgan Stanley's stock got a bounce on the report. They're up nearly 39 percent this year. The investment bank is trying to diversify and get a steadier stream of income by expanding its wealth management business. It completed its purchase of its brokerage joint venture with Citigroup in June. Its wealth management unit posted a pre-tax margin of 18-1/2 percent, coming close to the target the company has set for itself to hit by 2015.