Morgan Stanley beats estimates on higher trading revenue

Morgan Stanley’s profit was driven by gains in its fixed income and equities trading businesses. Above, the bank’s London headquarters at Canary Wharf. (Reuters)
Updated 18 July 2018
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Morgan Stanley beats estimates on higher trading revenue

  • Morgan Stanley said net income rose to $2.4 billion in the quarter from $1.8 billion a year ago
  • Banks are benefiting from increased market volatility due in part to escalating trade tensions

NEW YORK: Morgan Stanley reported a better-than-expected quarterly profit on Wednesday, driven by gains in its fixed income and equities trading businesses, rounding up a strong earnings season for US banks.
JPMorgan Chase & Co, Bank of America Corp, Goldman Sachs Group Inc, Morgan Stanley and Citigroup Inc. have all reported second-quarter earnings which beat expectations, with only Wells Fargo & Co. missing estimates.
Banks are benefiting from increased market volatility due in part to escalating trade tensions causing investors to buy and sell assets to protect their portfolios and take advantage of opportunities. Morgan Stanley highlighted its equity financing business and a stronger performance in commodities and credit products.
Morgan Stanley said net income rose to $2.4 billion in the quarter from $1.8 billion a year ago. Earnings per share rose to $1.30 from $0.87 the year before, beating the average analyst expectation of $1.11 per share, according to Thomson Reuters I/B/E/S data.
Shares in Morgan Stanley were up 2.9 percent in premarket trading.
Chief Executive Officer James Gorman said the bank had seen strength across all its businesses and geographies.
“The second quarter performance reflected active markets and healthy client engagement,” he said in a statement.
Net revenue from the bank’s sales and trading business rose 18 percent to $3.8 billion, with fixed income and equity trading businesses recording gains of 12 percent and 15 percent.
Rival Goldman Sachs said on Tuesday its trading revenue rose 17 percent, with bond trading showing a 45 percent jump and equity revenue remaining flat in its second quarter.
Morgan Stanley’s net revenue rose 12 percent to $10.6 billion, with institutional securities accounting for 54 percent of the gains. Institutional securities business comprises the bank’s investment banking and trading units.
The bank said net revenue at its wealth management business rose to $4.3 billion from $4.2 billion a year ago.


Moody’s upgrades Egypt’s rating to B2, expects more economic growth

Updated 18 April 2019
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Moody’s upgrades Egypt’s rating to B2, expects more economic growth

  • Moody’s believes Egypt’s large domestic funding base would support its resilience to refinancing shocks
  • The ratings agency expects energy price hikes as part of Egypt’s fuel subsidy reform

CAIRO: Rating agency Moody’s has upgraded Egypt’s sovereign rating, saying ongoing economic reforms will help improve its fiscal position and boost economic growth.
Moody’s upgraded the long-term foreign and local currency issuer ratings of Egypt to B2 from B3. The outlook was changed to stable from positive.
The decision was based on “Moody’s expectation that ongoing fiscal and economic reforms will support a gradual but steady improvement in Egypt’s fiscal metrics and raise real GDP growth,” the agency said in a statement late on Wednesday.
Moody’s also said it believed Egypt’s large domestic funding base would support its resilience to refinancing shocks despite the government’s very high borrowing needs and interest costs.
Moody’s said it expected a steady improvement of Egypt’s fiscal position, “albeit from very weak levels.”
Maintained primary budget surpluses combined with strong nominal GDP growth would help reduce the general government debt/GDP ratio to below 80 percent by the 2021 fiscal year from 92.6 percent in the 2018 fiscal year, it said.
Egypt’s fiscal year runs from July to June.
Moody’s also said it expected energy price hikes as part of Egypt’s fuel subsidy reform, which it believed would be completed in the 2019 fiscal year. This, along with the fiscal reforms implemented in the last few years, would allow the government to maintain the primary budget balance in surplus in the next few years, Moody’s said.
The upgraded rating was expected, but still good news for Egypt, said Allen Sandeep, head of research at Naeem Brokerage.
“It should help its case for new international bond issuances as we move forward,” he said.
Egypt is pushing ahead with tough economic reforms as part of a three-year $12 billion IMF loan deal signed in 2016.
The reforms, aimed at attracting investors who fled during the 2011 uprising, have included new taxes, deep cuts to energy subsidies and a currency devaluation. The reforms have helped the economy recover, but have also put the budgets of tens of millions of Egyptians under strain.