Profit At Morgan Stanley Drops 18% As Deal Drought persists

(CTN News) – The second quarter of Morgan Stanley’s financial year ended with a profit decline of 18% as Wall Street’s deal-making drought stunted revenue from investment banking activities.

According to Morgan Stanley Dealogic data, global M&A activity fell 36% compared with a year ago. This resulted in $1.16 billion from investment banking. The activity was in line with $1.16 billion reported last year.

In spite of this, the rise in the index from the first quarter has sparked hopes that a recovery is just around the corner.

According to the company’s CEO, James Gorman, the quarter started with macroeconomic uncertainties and subdued client activity, but ended with a much more constructive tone as a result of a more constructive environment in the marketplace.

Earlier this year, Morgan Stanley’s co-president Andy Saperstein had said that sales and trading “results will be notably down year over year versus a strong second quarter last year” as well as the “investment banking team is also having a very tough time”.

In the last quarter, the bank’s revenue from asset management dropped by 2%. It said in May that Morgan Stanley that the bank had set a target of increasing the assets under management to $10 trillion by the end of this year, and that it was open to acquisitions.

During the quarter, Morgan Stanley’s revenue rose by 2% to $13.46 billion, while its expenses rose by 8% to $10.48 billion.

Tuesday, the bank announced that it had posted a $2.3 billion profit for its common shareholders, which translates into a $1.24 profit per diluted share of the company.

In contrast, a year earlier, Morgan Stanley reported revenues of $2.39 billion, or $1.39 per diluted share.

There was an increase of 1.4% in the price of the investment bank’s shares in pre-market trading on Wednesday.

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