Morgan Stanley’s stock (NYSE: MS) has gained 3% YTD, as compared to the 16% rise in the S&P500 over the same period. Further, the stock is currently trading at $88 per share, which is 12% below its fair value of $99 – Trefis’ estimate for Morgan Stanley’s valuation. The investment bank posted better-than-expected results in the second quarter of 2023, with net revenues increasing by 2% y-o-y to $13.5 billion. While the wealth management revenues grew by 16% y-o-y, it was partially offset by an 8% drop in the institutional securities and a 9% decrease in the investment management segment. Notably, the institutional securities unit contributes close to 50% of the total revenues. It was down due to lower investment banking and a decline in sales & trading income. On the cost front, total expenses as a % of revenues increased in the quarter due to a 13% rise in compensation & benefits costs. Overall, it resulted in an adjusted net income of $2.05 billion – down 14% y-o-y.
The company’s revenues for the first half of 2023 were $23.97 billion, which is at par with the year-ago figure. It was due to a 10% drop in the institutional securities and a 6% decrease in the investment management segment, offset by a 13% growth in the wealth management division. Further, the noninterest expenses increased 6% in the year. Altogether, the adjusted net income was reduced by 18% y-o-y to $4.9 billion.
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