One of Mr. Gorman’s top priorities since becoming chief executive
Morgan Stanley reported total revenue of $9.3 billion in the second orange herve leger quarter, up 17 percent from a year ago. That gave the bank an important symbolic victory: it was the first time since 2008 that its quarterly revenue exceeded that of its rival Goldman Sachs. Earlier this week, Goldman reported a disappointing $7.3 billion in net revenue, its lowest figure since the financial crisis.
While Morgan Stanley’s results were encouraging, the bank was still “a work in progress,” said Michael Wong, an analyst with the financial research company Morningstar. “It’s too early for James Gorman to declare victory,” he said, referring to Morgan Stanley’s chief executive.
Morgan Stanley’s traders produced some stumbles, such as an interest-rate trade in June that reportedly lost the firm tens of millions of dollars. But gains from other trades offset those losses, and the firm’s overall trading revenue climbed 4 percent over year-ago levels, to $3.5 billion.
Morgan Stanley’s investment banking team, traditionally a strong suit, also improved, and was in on some of the quarter’s biggest deals, including the public offerings of LinkedIn, Groupon and Zynga. These deals helped push investment banking mini skirts for sale revenue to $1.5 billion, from $885 million a year ago. Underwriting revenue increased 57 percent in the period, to $940 million. Revenue from Morgan Stanley’s advisory division also improved, jumping 85 percent, to $533 million. That unit represented BJ’s Wholesale in its deal to sell itself to a group of private equity firms for $2.8 billion. It also worked with Capital One Financial, which bought ING’s American online banking group for $9 billion in June.
One of Mr. Gorman’s top priorities since becoming chief executive in January 2010 has been stabilizing the bank by beefing up its global wealth management and asset management groups, safer groups that fluctuate less with the ups and downs of the stock market. In January, he appointed Gregory J. Fleming to lead Morgan Stanley Smith Barney, the firm’s wealth management arm.
The bank also took steps this year to improve its asset management division, which is also run by Mr. Fleming, and which has historically been a sore spot for the firm. The division’s growth primarily stemmed from gains in the firm’s real estate investments and improvements to its core asset management business.
“This wasn’t about a bunch of trading gains,” said Ruth Porat, the firm’s chief financial officer, in an interview after Thursday’s earnings release. “We’ve been very focused on building up the client side and delivering content with a point of view.”
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