Morgan Stanley net income almost doubles

Bank announces it has received go-ahead from regulators to buy back $500 million of its shares

Morgan Stanley has reported that its second-quarter net income almost doubled to $980 million, sending its shares sharply higher and capping off a bumper earnings season on Wall Street.

Revenue at the bank rose 22 per cent to $8.5 billion in the three months to July following a jump in trading and investment banking activity, compared with the same period last year. Morgan Stanley earned 45 cents a share – above the 43 cents expected by analysts – after stripping out the effect of an acquisition and an accounting quirk. The bank also surprised investors by announcing that it had received the go-ahead from regulators to buy back $500 million of its shares. Its share price rose almost 5 per cent in early New York trading to $27.82, its highest so far this year.

Morgan Stanley's results concluded a strong quarter, with banks including Goldman Sachs and JPMorgan Chase also reporting higher-than-expected profits. The big banks appear to have largely shrugged off volatility that intermittently rocked markets in May and June as investors fretted over higher interest rates.

Adjusted earnings
Morgan Stanley's adjusted earnings per share strip out an 8 cents loss tied to its acquisition of Smith Barney, the retail brokerage that it has been buying from Citigroup, and a 6 cents gain from an accounting rule tied to movements in the value of the bank's own bonds.

Last month, the bank received regulatory approval to buy the rest of Smith Barney, in what James Gorman, chairman and chief executive, described at the time as a "historic day" for the company.– (Copyright The Financial Times Limited 2013)