Quarterly revenue at the investment bank fell in each of its main businesses. But the results easily beat Wall Street's lowered targets. Fred Katayama reports.
Morgan Stanley's quarterly profit fell 12 percent despite cutting costs. Revenue declined in each of its four main business units. Unlike its peers whose trading revenue got a huge lift from Britain's vote to quit the European Union, Morgan Stanley's trading fell, although its gain in fixed income revenue beat some analysts' forecasts. The investment bank has reorganized its fixed income business this year by cutting about a fourth of its staff. Investment banking revenue plummeted, yanked lower by a 40 percent drop in underwriting of stocks and bonds. The company sharply slashed expenses, lowering pay and benefits. But its return on equity fell, falling far shy of CEO James Gorman's goal for next year. Still, despite a pullback in Morgan Stanley's earnings and revenue, both easily beat Wall Street's lowered forecasts. Oppenheimer analyst Chris Kotowski called it a "solid beat," saying it was "... powered primarily by a strong performance in fixed income, currencies and commodities trading .. .with an assist from a good performance on expenses." Morgan Stanley's shares, down 11 percent this year, rose in early trading on the earnings beat.