Morgan Stanley posts strong (to very strong) earnings, only nicked by subprime bullet

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Morgan Stanley, the last of the big independent brokers to post earnings, trended more toward Lehman’s expectation exceeding earnings than Bear’s subprime induced tumble or Goldman’s relatively flat quarter.
Morgan Stanley’s Q2 net income jumped 40% from last year to $2.58bn or $2.45 a share. The results handily beat the consensus analyst estimate of $2.01 a share. Morgan Stanley’s Q2 revenue jumped 32% from last year to $11.52bn and beat the analyst estimate of $10.03bn.
The main growth drivers were strong results in the institutional securities and global wealth management divisions, which posted pretax income growth of 55% and 67% respectively.
The institutional securities division was aided by a 65% jump in investment banking revenue and a 33% jump in equity sales and trading revenue.
Morgan Stanley’s strong earnings can partly be attributed to the firm’s ability to dodge the subprime bullet a bit better than its rivals. Merely sustaining a flesh wound from a revenue dip in residential mortgage securitized products, Morgan Stanley’s fixed-income sales and trading revenue surged 34% to $2.9bn and posted its second best quarter ever.
The much maligned and soon to be spun off Discover credit card unit experienced a 13% drop in revenue to $1.04bn and 38% drop in pretax income to $0.33bn. The unit’s growth number was negatively impacted by a 2006 benefit from federal bankruptcy law reform.
Morgan Stanley's Net Jumps 40% On Strength in Securities Business [Wall Street Journal]

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