Morgan Stanley (NYSE: MS) reported better-than-anticipated fiscal 2021 second-quarter earnings and revenues, aided by the robust performance of the investment banking division. The financial service provider also doubled its quarterly dividend while boosting its share repurchase authorization. Following the results, the stock closed at $92.63, almost unchanged from the prior close.
The New York-based company reported second-quarter revenues of $14.759 billion, an increase of 8% from $13.660 billion in the second quarter of fiscal 2020.
For the quarter ended June 30th, 2021, Morgan Stanley posted net earnings of $3.408 billion, or $1.85 per share, up 12% from $3.047 billion or $1.96 per share in the quarter ended June 30th, 2020.
Excluding integration-related expenses, the Q2 2021 adjusted earnings were $1.89 per share, compared with $1.96 a share in Q2 2020.
Analysts polled by Refinitiv anticipated Morgan Stanley to report earnings of $1.65 per share on revenues of $13.96 billion.
Commenting on the results, James Gorman, Chairman and CEO, said, “The Firm delivered another very strong quarter, with contributions from all of our businesses.”
Segment-wise,
- Investment banking revenues increased 20% y-o-y to $2.560 billion.
- Trading revenues were $3.330 billion, down 31% from last year.
- Investments revenues rose by 39% to $381 million.
- Commission and fees grew 19% y-o-y to $1.308 billion.
- Asset management revenues were $4.973 billion, up 52% from 2Q21.
- Interest income fell 6% y-o-y to $2.212 billion.
For the recent quarter, provision for credit losses declined to $73 million, from $239 million in the prior-year period.
Based on the nature of business,
- Institutional securities revenues declined to $7.092 billion, from $8.199 billion, but surpassed the analyst’s estimate by roughly $350 million. The decline was led by the fixed income division, which recorded a 44% drop in revenues to $1.682 billion and missed the $2 billion estimate issued by analysts. Investment banking revenues grew 15.8% to $2.376 billion and surpassed the $2.10 billion estimate. Equity income rose by 7.61% to $2.827 billion and surpassed analysts’ estimates by $400 million. Notably, Morgan Stanley’s equity trading division is the biggest in the world.
- The wealth management division, which manages the E-Trade business acquired last year, reported revenues of $6.095 billion, up 29.6% from last year and greater than the $5.90 billion forecasts.
- Investment management revenues almost doubled to $1.702 billion and surpassed the $1.53 billion estimate.
The company’s board approved a 100% increase in the quarterly dividend to $0.70 per share, payable on August 13th, 2021. Furthermore, Morgan Stanley also announced a $12 billion share repurchase program valid through June 30th, 2022.
The strong quarterly results and 100% increase in quarterly dividends are expected to keep the stock bullish in the short term.
The historical price chart indicates that the stock is moving along the ascending trend line, as shown in the image below. Furthermore, the stochastics indicator is also in the bullish region. Therefore, we are anticipating the stock to remain in an uptrend in the short term.
Disclaimer: Any financial trading analysis offered here is our opinion and is not intended as advice or direction for investors. We cannot guarantee the success of any trades made as a consequence of this article, and we encourage traders to incorporate a strong money management strategy to limit losses when they enter the markets. Please use this article as part of your own research before formulating strategies prior to trading.
