The first-quarter profit of Morgan Stanley beat the estimates of Wall Street as they cut costs and revenue from trading stocks and bonds decreased less than some analysts have predicted. Their shares increased.
The New York-based company issued a report stating that their net income dropped 53 percent to $1.3 billion, or 55 cents per share, from 2.39 billion or $1.18, a year earlier.
Although Chief Executive Officer James Gorman has been reducing the fixed-income trading division of the firm to emphasize the less volatile wealth management business, they are still exposed to slumping markets that can hurt results in Wall Street. Aside from Morgan Stanley, JPMorgan Chase & Company, Bank of America Corporation, and Citigroup Incorporated also reduced their expenses in order to compensate for their declining revenues. Meanwhile, Goldman Sachs Incorporated, which reported results on Tuesday, is going for the biggest cost-cutting effort in years, according to some people who are aware of this plan.
Revenue of Morgan Stanley
The revenue declined 21 percent to $7.9 billion in comparison to the $7.76 billion estimate of 18 analysts on the Bloomberg survey. Meanwhile, non-interest expenses dropped 14 percent to $6.05 billion, which is below the estimate of $6.42 billion. Compensation expenses were also reduced by 19 percent to $3.68 billion and non-compensation costs were down by 6.2 percent to $2.37 billion.
“The first quarter was characterized by challenging market conditions and muted client activity. While we see some signs of market recovery, global uncertainties continue to weigh on investor activity,” says Gorman in a statement.
On the other hand, the shares of Morgan Stanley, which dropped 19 percent this year through Friday, have increased by 3.1 percent to $26.55. The firm generated $873 million in first-quarter fixed income revenue; that is 54 percent less than the previous year — the weakest start to the year since 2010.