August 18, 2019

DealBook: Morgan Stanley Posts $558 Million Loss but Beats Expectations

Despite showing improvement in its major divisions, Morgan Stanley reported a second-quarter loss of $558 million on Thursday, as it continued to deal with the aftereffects of the financial crisis.

The loss stems from a deal struck earlier this year with the Mitsubishi UFJ Financial Group, which had provided a much-needed cash infusion in the depths of the disaster. With the new agreement, Morgan Stanley freed itself of a costly continuing burden, but got saddled with a $1.7 billion one-time charge in the quarter.

The financial firm posted a loss of 38 cents a share. Still, the results were significantly better than a loss of 61 cents a share expected by analysts.

More important, Morgan Stanley’s underlying businesses all reported gains, and it posted revenue of $9.3 billion, up 17 percent from the first quarter. It was the first time since 2008 that Morgan Stanley’s quarterly revenue had exceeded that Goldman Sachs.

“While global markets remained challenging this quarter, the firm delivered higher year-over-year revenues across our three major business segments,” James P. Gorman, the bank’s chief executive, said in a statement.

Morgan Stanley’s largest business, Institutional Securities, got a significant boost from underwriting and deal-making activity.

The technology banking team, for example, has won coveted underwriting spots on the year’s hottest technology offerings, including LinkedIn, Groupon and Zynga. Underwriting revenues increased 57 percent in the period to $940 million.

Morgan Stanley has also been involved in some big mergers and acquisitions in recent months.

The firm represented BJ’s Wholesale in its deal to sell itself to a group of private equity firms for $2.8 billion. It also worked with Capital One Financial, which bought ING’s American online banking group for $9 billion. For the quarter, advisory revenue jumped 85 percent, to $533 million.

Morgan Stanley Smith Barney, the firm’s global wealth management division, continued to be a steady performer, posting net revenues of $3.5 billion this quarter, compared to $3.0 billion a year ago. Mr. Gorman tapped Gregory J. Fleming to run the division in January, as part of a move to beef up the firm’s less risky arms and make its bottom line less susceptible to market swings.

The bank also took steps this year to improve its asset management arm, which is also run by Mr. Fleming, and which has historically been a sore spot for the firm. This quarter, the division posted net revenue of $645 million, an increase of 57 percent over the same quarter last year. The increase was primarily due to gains in the firm’s real estate investments and higher results in its core asset management groups.

Article source: http://dealbook.nytimes.com/2011/07/21/morgan-stanley-posts-loss-of-558-million/?partner=rss&emc=rss

Speak Your Mind