Morgan Stanley Misses Q2 Estimates, Shares Drop

The bank had to post $2.9 billion in collateral after Moody's downgraded it

   

Morgan Stanley Misses Q2 Estimates, Shares Drop

Morgan Stanley (NYSE:MS) said today that it earned $591 million during its second quarter, down 50% from $1.19 billion during the same time last year. EPS came in at 29 cents. Revenue for the quarter dropped 24% to $6.95 billion.

The results disappointed analysts who had predicted revenue of $7.7 billion and EPS of 43 cents, The Wall Street Journal noted.

Morgan Stanley1 200x200 Morgan Stanley Misses Q2 Estimates, Shares Drop
Don’t Buy Into Big Banks’ Hooey

Investors weren’t happy either. Morgan Stanley shares fell about 5% in Thursday morning trading.

The company was hit with a two-notch credit downgrade — from A2 to Baa1 — by Moodys last month, forcing it to post $2.9 billion in collateral to its creditors, partners and exchanges. Total increases in collateral resulting from the credit downgrade could hit $6.3 billion, the bank said.

Morgan Stanley reported that during the quarter, it saw a 37% drop in revenue from its institutional securities business, which generated $3.23 billion. Its fixed-income trading business saw an even worse decline, falling from 2011 revenue of $1.9 billion to just $770 million in the second quarter.

The bank’s equities trading business also contracted from revenue of $1.8 billion last year to $1.1 billion during the past quarter.

Earlier this week, Goldman Sachs (NYSE:GS) topped Wall Street forecasts even though its second-quarter net income fell 11% to $962 million, compared to the same time last year.


Article printed from InvestorPlace Media, http://investorplace.com/2012/07/morgan-stanley-misses-q2-estimates-shares-drop/.

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