Record profits, sales at Morgan Stanley
A tale of two different fortunes from two of America's biggest Wall Street banks.
Morgan Stanley on Thursday posted record quarterly profits and sales -despite all the economic turmoil of the past three months. Every unit within the bank churned out solid results. The quarter was so strong -CEO James Gorman said he doesn't think he can repeat it. The star of the quarter was most definitely the bank's trading unit. It pocketed trading fees from huge market swings during the economic shutdown and the subsequent revival. Unlike most banks, Morgan Stanley is less dependent on the consumer lending business, which is in the midst of an upheaval with 32 million Americans on jobless benefits so far in July.
Not so at Bank of America. Quarterly profits were slashed in half and sales were down as well. The company took a hit from a massive slowdown in its consumer banking unit where net profit plunged to just $71 million from more than $3 billion a year ago. And the bank is expecting more pain to come - it told investors that it will continue to struggle as long as interest rates stayed low. The bank set aside $5 billion to cover loans that may not be repaid.
Shares of Bank of America are down more than 30 percent year to date, while Morgan Stanley's stock is up during the same time frame.
