A slowdown in trading and investment banking helped more than halve Morgan Stanley's profit. Fred Katayama reports.
A sharp slowdown in trading helped chop Morgan Stanley's quarterly profit by more than half. Low energy prices hurt its commodities trading business. That, along with weak results in investment banking, pulled down overall revenue. Morgan Stanley has been trying to bring more stability to earnings by shifting away from the volatile bond trading business to wealth management. Profit and revenue also fell at its wealth management unit, but that was small compared to the drops in trading and investment banking. Keefe, Bruyette & Woods analyst Brian Kleinhanzl said, "The company only generated a 7.5 percent tangible return on equity, and that reinforces our concerns about Morgan Stanley's return potential longer term." Morgan Stanley's results follow a pattern posted by its rivals: profit falling sharply but beating analysts' low estimates. Its stock rose in early trading, chipping away at its 19 percent decline this year.