Updated, 7:55 p.m. | Since the financial crisis, Morgan Stanley has wrestled with erratic results in its powerful trading business, once its most lucrative unit, a situation familiar to its peers.
As a result, the bank has looked to other areas for more stable sources of revenue. That bet has largely paid off in the face of some skepticism. In the latest indication, Morgan Stanley said on Thursday that its second-quarter earnings surged, driven largely by growth in the firm’s wealth management operations, which generates a more predictable stream of fees.
Its results were also helped by strong performances in its investment banking and stock trading segments.
Excluding certain charges relating to its debt and a big tax benefit, Morgan Stanley posted a profit of $1.3 billion, or 60 cents a share, on $8.5 billion in revenue, a 46 percent rise in earnings from the second quarter of 2013. Analysts had expected Morgan Stanley to report earnings of 55 cents a share on revenue of $8.1 billion, according to a survey by Thomson Reuters.
Including certain charges relating to its debt and the big tax benefit, Morgan Stanley’s profit nearly doubled, to $1.9 billion.
Among the firm’s bright spots was its wealth management unit, where pretax income rose to $767 million in the second quarter from $655 million in the period a year earlier. This year’s results represented a pretax profit margin of 21 percent.
“Our quarterly results demonstrated solid performance, despite a muted operating environment,” James P. Gorman, the bank’s chief executive, said in a statement.
The firm has also taken steps to exit some of its commodities businesses, and plans to complete the sale of its oil unit to Rosneft, the Russian oil company, this year.
Morgan Stanley says it does not expect that a new round of United States sanctions against the country, announced Wednesday, will affect the deal.
“Recognizing the guidance that was released last night, we don’t believe it applies to our transaction,” Ruth Porat, Morgan Stanley’s chief financial officer, said in an interview. “We continue to do the work for a closing by the end of the year, subject to regulatory approval.”
Including certain charges relating to its debt and the tax benefit, Morgan Stanley’s return on equity, a closely watched yardstick of profitability, jumped to 11.5 percent, from 9.2 percent last quarter. But stripping out those adjustments, the bank’s return on equity reached 7.3 percent in the quarter, far shy of its closest rival, Goldman Sachs, which reported a figure of 10.9 percent.
“You know what, there’s a great old phrase of, ‘A journey of 1,000 miles begins with a single step,’ ” Mr. Gorman said during a call with analysts on Thursday, about getting to the goal of a return on equity of 10 percent.
In quiet markets, investors see fewer opportunities for big bets. As a result, trading activity has fallen across Wall Street. Despite this, the big banks had a better quarter than expected in their trading operations.
“I think the market had feared a more substantial decline for Morgan and the rest of the industry,” said Devin P. Ryan, an analyst with the JMP Group.
Morgan Stanley reported that fixed-income and commodities trading revenue fell slightly to $1 billion from $1.2 billion in the second quarter. That decline was not as steep as analysts had feared, largely mirroring results at Goldman Sachs.
On Wednesday, Bank of America surprised analysts by reporting that revenue in its fixed-income, currencies and commodities unit had increased 5 percent from a year ago.
“I think that will be perceived as good news,” Mr. Ryan said of Thursday’s results. “I think we saw some similar trends out of Morgan Stanley that we’ve seen out of a number of their big-bank peers.”
Shares of Morgan Stanley fell 20 cents, to $32.30, on Thursday during a down day for the markets.
Investment banking, which benefited from a more favorable stock market, helped the bank’s profits significantly. Equity underwriting rose to $489 million, up from $327 million last year. The bank’s work on a number of significant deals also helped push advisory revenue up to $418 million from $333 million in the period a year earlier.
Morgan Stanley’s earnings got a $609 million boost in the second quarter from a tax benefit.
Ms. Porat said that the bank had been subject to a customary tax examination that covered the three years from 2006 until 2008. The audit, she said, had been previously disclosed. Morgan Stanley had set aside reserves to cover the possibility that it might have to pay additional taxes.
Once the tax authorities made it clear that Morgan Stanley didn’t have to pay the extra taxes, the bank no longer needed the reserves. Undoing the reserves allowed Morgan Stanley to pay lower taxes in the second quarter.