Morgan Stanley drops 2% after Q2 earnings

Morgan Stanley (MS.US) released Q2 2024 earnings report today ahead of the Wall Street session. Bank's shares launched today's trading with an around-2% bearish price gap, even as results were better than expected. However, company's wealth management business lagged.

Morgan Stanley reported better-than-expected Q2 net revenues in almost every segment. The only segment that missed expectations was Wealth Management, company's biggest unit. Morgan Stanley's wealth management attracted $36.4 billion in new assets during the quarter, missing analysts' expectations and putting the unit on track to miss annual target. Apart from miss in Wealth Management, report was solid, showing much higher than expected net interest income and EPS. Return on equity of 13.0% also turned out to be higher than expected.

Still, as bank's biggest unit and key driver of growth in recent years, Wealth Management results draw the most attention and are driving market's reaction to earnings release.

Morgan Stanley Q2 results

• Net revenue: $15.02 billion vs $14.27 billion expected
  • Wealth management: $6.79 billion vs $6.86 billion expected
  • Equity sales & trading: $3.02 billion vs $2.68 billion expected (+18% YoY)
  • FICC sales & trading: $2.00 billion vs $1.86 billion expected (+16% YoY)
  • Institutional Investment Banking: $1.62 billion vs $1.37 billion expected
  • Advisory revenue: $592 million vs $523.3 million expected
  • Equity underwriting: $352 million vs $346.8 million expected
  • Fixed income underwriting: $675 million vs $515.8 million expected
• Net interest income: $2.07 billion vs $1.78 billion expected
• Non-interest expense: $10.87 billion vs $10.57 billion expected
  • Compensation expenses: $6.46 billion vs $6.36 billion expected
  • Non-compensation expenses: $4.41 billion vs $4.22 billion expected
• Wealth management pretax profit: $1.80 billion vs $1.85 billion expected
• Wealth management pretax margin: 26.8% vs 27.0% expected
• Return on equity: 13.0% vs 11.7% expected
• Standardized CET1 ratio: 15.2% vs 15.1% expected
• EPS: $1.82 vs $1.65 expected
• Assets under management: $1.52 trillion vs $1.53 trillion expected
• Total deposits: $348.89 billion vs $349.76 billion expected
• Provisions for credit losses: $76 million vs $54.3 million expected

Morgan Stanley (MS.US) opened around 2% lower today, following release of Q2 2024 earnings report. While results were mostly better-than-expected, a key Wealth Management unit disappointed. Source: xStation5