Morgan Stanley profits plunge as wealth business fails to offset drought of deals

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Morgan Stanley’s net profit fell 13 percent during the second quarter, as chief executive James Gorman’s wealth management campaign failed to offset declining trading.

For the second quarter, Morgan Stanley reported $2.2 billion in net income to shareholders, down from $2.5 billion a year earlier and in line with analysts’ estimates, according to data compiled by Bloomberg.

“The company delivered solid results in a challenging market environment. “The quarter began with macroeconomic uncertainties and weak client activity, but ended on a more constructive tone,” Gorman said in a statement.

Under Gorman, Morgan Stanley has grown significantly in more stable businesses such as wealth and asset management in an effort to make its earnings less volatile. But the Wall Street bank remains subject to market volatility in trading and investment banking, suffering from an industry-wide downturn and battling a drought.

Gorman plans to step down as chief before the middle of next year and is expected to choose his successor from among a trio of internal candidates who run each of Morgan Stanley’s three divisions: Ted Pick , Andy Saperstein and Dan Simkowitz.

The bank’s wealth management unit, which is run by Saperstein and has been a key growth driver for Morgan Stanley in recent years, reported revenue of $6.7 billion, up 16 percent year-over-year and beating estimates of $6.5 billion. is more than The business generated $89.5 billion in net new assets, well above analysts’ forecasts of $60.3 billion.

Pick’s run Morgan Stanley’s institutional securities division, which includes investment banking and trading, reported $5.65 billion in net revenue, down 8 percent from a year earlier and slightly above analysts’ expectations of $5.5 billion.

Investment Management, headed by Simkowitz, is Morgan Stanley’s smallest division but expanded through the acquisition of Eaton Vance. Second quarter revenue fell 9 percent to approximately $1.3 billion, in line with market expectations.