Morgan Stanley on Tuesday 18th July, reported a drastic 14% fall in profit for the second quarter on deal-making drought. The bank said profit applicable to common shareholders fell to $2.05 billion, or $1.24 per diluted share, for the three months ended June 30. That is down from $2.39 billion, or $1.39 per diluted share, a year earlier.
Morgan Stanley CEO James Gorman cited a “challenging market environment”, in the quarter, which “started with macroeconomic uncertainties and subdued client activity, but ended with a more constructive tone”. Its revenue from investment banking was flat at $1.16 billion. Trading revenue also seemed to fall as volatility declined, with fixed income sinking 31% while equities fell 14%. While more subdued markets weighed on trading, stabilizing market conditions had not yet spurred activity in capital markets, Chief Financial Officer Sharon Yeshaya informed. Morgan Stanley’s earnings were also eroded by $300 million in severance costs after the bank laid off thousands of employees this year.
Gorman had announced in May, this year that he would be stepping down within a year. Morgan Stanley’s board will focus on the selection Gorman’s successor at its summer and fall meetings, a person familiar with the situation told Reuters last month.
