James Gorman, Chairman and CEO of Morgan Stanley, will appear on CNBC's Squawk Box on January 22, 2020 at the 2020 World Economic Forum in Davos, Switzerland.
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Morgan Stanley released second quarter results on Thursday that exceeded analysts' estimates of stronger than expected trading sales.
The bank posted record earnings of $ 3.2 billion, or $ 1.96 per share, including a taxable expense of 8 cents per share that exceeds Refinitiv's estimate of $ 1.12 per share. Revenue rose about 30% to a record $ 13.4 billion, a surprising increase that exceeded expectations by a full $ 3 billion.
The bank's shares rose by 0.2% in premarket trading.
Morgan Stanley, essentially a global investment bank coupled with a large wealth management business, benefited from one of Wall Street's best trading quarters in years. The New York-based bank operates the largest stock trading business on Wall Street and a bond trading department that is overweight.
Bond traders had a blowout quarter and saw sales almost 170% higher to $ 3.03 billion. Stock traders saw a more modest 23% increase in sales to $ 2.62 billion. Together, the trading division generated $ 1.4 billion more in sales than analysts expected.
Investment banking revenue increased 39% to $ 2.05 billion, reflecting a boom in debt and equity issuance.
Under Chief Executive Officer James Gorman, Morgan Stanley has highlighted his wealth management division to provide a steady and growing source of income. He doubled this with the acquisition of E-Trade, which will be completed in the fourth quarter.
Wealth management saw a surprising 6% increase in sales to $ 4.68 billion due to an increase in transaction fees.
"Our decades of business transformation should ensure stability in times of serious stress," Gorman said in the press release Thursday. "The model was tested in the second quarter and we performed extremely well and achieved record results."
Morgan Stanley is the last of the six largest US banks to report second quarter earnings. JPMorgan Chase, Goldman Sachs, and Citigroup exceeded analysts' expectations for strong trade and investment banking results, while Wells Fargo made its first loss on loan loss provisions since the financial crisis.
Wall Street expected the following:
Earnings: $ 1.12 per share, 9.2% less than a year earlier, Refinitiv said.
Revenue: $ 10.3 billion, almost unchanged from last year.
Wealth Management: $ 4.12 billion according to FactSet.
Trading: Equities $ 2.35 billion; fixed income $ 1.81 billion.
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