Is Morgan Stanley going to remain mortgage free?
Profits driven by investment banking
Morgan Stanley (MS) reported net revenues of $8.6 billion for the second quarter ended June 30, 2014 compared with $8.5 billion a year ago.
For the current quarter, income from continuing operations applicable to Morgan Stanley was $1.9 billion, or $0.94 per diluted share, compared with income of $1 billion, or $0.43 per diluted share, for the same period a year ago. This came within analysts expectations.
Results for the quarter included a net discrete tax benefit of $609 million or $0.31 per diluted share, principally related to the remeasurement of reserves and related interest.
From a Basel 3 perspective, the company is also doing well. Common Equity Tier 1 risk-based capital ratio was approximately 13.8% and its Tier 1 risk-based capital ratio was approximately 15.2%.
Bloomberg reported in November that the firm would look to reenter the mortgage space, but that is not materializing yet, according to the earnings report. In an update from Reuters today, the CEO reportedly said, during the conference call with investors, mortgages are in fact growing at the firm, but weak demand is holding back progress.
The surge in profits is mainly due to investment banking fee-based profits.
It should be noted that profits are compared to this quarter last year.
Compared to the first quarter, profits are down at Morgan Stanley in total, as well as in investment banking and wealth management.