Morgan Stanley profit beats on wealth management gains, lower expenses

Morgan Stanley (N:MS) reported a drop in quarterly profit Thursday, hit by lower market activity amid global trade tensions and expectations for U.S. interest rate cuts. It was the last big U.S. bank to report earnings in a quarter that exposed weaknesses in Wall Street's investment bank and trading businesses. But Morgan Stanley executives downplayed the toll rate cuts could have on profitability and highlighted growth in the bank's wealth management unit. The wealth business, which contributes 44% of Morgan Stanley's revenue, rose 1.9% to $4.40 billion from a year earlier. The unit benefited both from higher stock prices and more lending to customers. That more than offset the effects of lower interest rates. The bank reported pre-tax profit margin of 28.2% for the business, just above the high end of its 26% to 28% target. Chief Executive Officer James Gorman placed a huge bet on wealth manager nearly a decade ago as a source of stable revenue.