Wall Street investment bank Morgan Stanley has today reported a lower, but better-than-expected, adjusted second-quarter profit, helped by a decline in expenses.
The bank said its net income came to $1.43 billion, or 75 cents per share, in the quarter ended June 30.
Analysts on average had expected earnings of 59 cents per share in the latest quarter, according to Thomson Reuters.
Morgan Stanley had reported an adjusted profit of $1.69 billion, or 79 cents per share, a year earlier.
The earnings for the latest quarter take into account a rule change that no longer requires Morgan Stanley to reflect changes in the value of its own debt in its earnings.
Morgan Stanley, which is in the middle of a $1 billion cost cutting programme, said total non-interest expenses fell 8.4% to $6.43 billion in the quarter. Compensation costs fell 8.9% to $4.02 billion.
The bank, which has struggled to boost shareholder returns over the last several quarters, reported a return on equity of 8.3%, well short of chief executive James Gorman's target of 9-11% by the end of next year.
Like its rivals, Morgan Stanley has had to focus on cutting costs as investors and companies have steered clear of dealmaking, listing stocks and issuing debt.
CEO Gorman has been shifting Morgan Stanley's focus away from more volatile areas such as bond trading and towards more stable businesses such as wealth management.
The bank has reorganised its fixed income unit since the beginning of the year, including exiting the physical oil business and cutting its headcount by about 25%.
The bank said today that its adjusted sales and trading revenue fell about 2% to €3.26 billion.
Revenue from fixed income and commodities trading rose 2.4% to $1.30 billion, while equities trading revenue fell 5.5% to $2.15 billion.
"Our results this quarter reflect solid performance in an improved but still fragile environment," Gorman said in a statement.
The bank's CEO said last month he was targeting revenue of about $1 billion per quarter from its business that trades fixed income securities, commodities and currencies.
The bank's closest rival, Goldman Sachs, yesterday reported a 78% rise in quarterly profit yesterday, helped by a sharp decline in expenses and a rise in trading activity in some parts of the fixed-income markets.
