Investment bank Morgan Stanley said its second-quarter profit rose 11 percent from a year ago, and the bank's trading desks were able to outmaneuver its rivals in a quiet market.
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After the bank's major competitors — Goldman Sachs, JPMorgan Chase, Citigroup and Bank of America — all reported declines in trading during the period, many expected the same from Morgan Stanley. But while Morgan Stanley did report a modest decline in trading revenue, it was nowhere close to those seen by its rivals.
Morgan Stanley said Wednesday it earned $1.76 billion in the three months that ended June 30, or 87 cents per share, compared with $1.58 billion, or 75 cents per share, in the same period a year earlier. That handily beat analysts' expectations of 76 cents per share.
The bank had bond trading revenue of $1.2 billion, down just slightly from $1.3 billion a year earlier. The division at Goldman Sachs that trades similar securities reported a drop of 40 percent. Bank of America had a decline of 14 percent and JPMorgan was down 19 percent.
Stock trading, a market that historically is Morgan Stanley's strongest, had a modest increase in revenue.
The strong quarter in trading comes as Morgan Stanley is moving away from relying on stock trading to focusing on more stable businesses, like asset and wealth management.
Morgan's better-than-expected quarter was also reflected in its return-on-equity ratio, a measure of an investment bank's profitability, which improved to 9.1 percent from 8.3 percent a year earlier. That's still below the long-term goal of Morgan's management for a return-on-equity of above 10 percent, however.
"Our second-quarter results demonstrated the resilience of our franchise in a subdued trading environment," James Gorman, chairman and CEO of Morgan Stanley, said in a statement.
Morgan Stanley's wealth management division also had a relatively strong quarter, reporting a profit of $1.1 billion compared with $859 million a year earlier. Assets under management also increased.
Overall, Morgan Stanley had revenue of $9.50 billion, up from $8.91 billion a year earlier.
Morgan Stanley shares rose 2 percent to $46.07 in afternoon trading.