This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Morgan Stanley Rises: Financial Winner

The market yield for 10-year U.S. treasury bonds has risen over 100 basis points since the end of April, as investors have anticipated a tapering of monthly bond purchases by the Federal Reserve, which have continued at a pace of $85 billion each month since last September.

The widening yield curve will over time have a positive effect on net interest margins. In the meantime, the banking industry's unrealized gains on available-for-sale securities, which had risen steadily as long-term rates declined, nearly evaporated during the second quarter.

Unrealized gains on AFS securities were down by $51.1 billion, or 89% from the previous quarter, according to the FDIC. " Unrealized gains and losses on available-for-sale securities do not affect current earnings, but they do have implications for future earnings if the securities are sold," the agency said.

Credit leverage continued to be a major theme for the industry, with combined provisions for loan loss reserves declining to $8.6 billion, from $11 billion the previous quarter and $14.2 billion a year earlier. The FDIC said that provisions for reserves were at their lowest point since the third quarter of 2006.

The industry's combined loan loss reserves declined by $6.4 billion during the second quarter.

The FDIC said that banks' combined non-interest income grew to $66.9 billion in the second quarter from $66.5 billion the previous quarter and $60.2 billion a year earlier.

Banks continued to see success in their cost-cutting efforts, with the industry's combined efficiency ratio improving to 58.76% during the second quarter, from 58.92% during the first quarter and 61.29% during the second quarter of 2012. The efficiency ratio is, essentially, the number of pennies of expenses incurred for each dollar of revenue.

Morgan Stanley

Morgan Stanley's shares have returned 37% this year following a return of 28% for 2012. The shares trade just below their reported June 30 tangible book value of $26.27, and for 10 times the consensus 2014 earnings estimate of $2.58 a share, among analysts polled by Thomson Reuters. The consensus 2015 EPS estimate is $2.92.

Please see TheStreet's earnings coverage for a review of Morgan Stanley's second-quarter results, which included the firm's acquisition of Citigroup's (C) remaining stake in the companies' retail brokerage joint venture.

2 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
ZION $26.42 0.00%
KEY $14.00 0.00%
MS $35.83 0.00%
STT $73.47 0.00%
AAPL $123.25 0.00%

Markets

DOW 17,712.66 +34.43 0.19%
S&P 500 2,061.02 +4.87 0.24%
NASDAQ 4,891.2190 +27.8570 0.57%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs