Morgan Stanley posts Q2 loss

NEW YORK - MORGAN Stanley on Wednesday reported a third straight quarterly loss, falling further behind chief rival Goldman Sachs as fixed income and asset management results disappointed.

The results prompted Morgan Stanley Chief Financial Officer Colm Kelleher to label 2009 a 'year of transition'. 'We are not into the quick show of how good we are,' Kelleher said in an interview with Reuters Television. 'What we want to show is steady improvement, which we are doing, and fleshing out a model which we believe is robust, within which institutional securities is key.'

Morgan Stanley reported a loss of US$1.26 billion (S$1.81 billion), or US$1.10 per share, for the second quarter, compared with a profit of US$1.1 billion, or US$1.02 a share, a year earlier. Net revenue fell 11 per cent to US$5.4 billion.

Stripping out one-time items, Morgan Stanley posted a loss of US$1.37 a share, much worse than analysts' average forecast of a loss of 53 cents, according to Reuters Estimates.

Morgan Stanley struggled in key areas during the quarter, including commercial real estate, where it reported net losses of US$700 million amid declines in the market.

Home sales still going strong

When private home sales unexpectedly jumped in February, in the thick of Singapore's worst-ever recession, pundits called it a false dawn and warned that the rally would not last.

But now, the market has sustained its rebound for five straight months and is expected to keep growing.

Figures released last Wednesday showed that last month's new home sales hit a record high of 1,825, while recent news reports indicate that this month's sales figures will still be strong.

All this has prompted previously sceptical analysts to turn more decidedly positive on the sector.
At least three research houses - UOB Kay Hian, DMG & Partners and DBS Vickers - are now overweight on Singapore property, which means they see property stocks as better valued compared with stocks in other sectors.

Why the change in sentiment? Recent data offers a whole host of reasons, according to the analysts.

One is that the worst of the economic crisis is over, and Singapore in particular looks to have turned the corner. Last Tuesday, the Government said the economy jumped 20.4 per cent between March and June to rise out of recession, pulling up market confidence and the full-year growth forecast along with it.

In the same quarter, developers sold 4,714 brand-new units - already more than the 4,370 they sold for the whole of last year.

The improvement in home sales is also spreading to more segments of the market, said UOB Kay Hian's property analyst Vikrant Pandey.

While the rally in private home sales started in entry-level homes - a result of pent-up demand from HDB upgraders and genuine owner-occupiers shut out of the last property boom - the positive sentiment has widened to include pricier units.

Sales of high-end and luxury homes have gained traction recently, with 'a steady increase noted in the number of transactions above $1,500 per sq ft since the beginning of this year', said Mr Pandey.

Last month, high-end sales were boosted by the 146 units sold in One Devonshire in Somerset, at a median price of $1,771 psf. Three units were also sold above the benchmark price of $3,000 psf: at The Orchard Residences, Nassim Park Residences and The Ritz-Carlton Residences.

Most importantly, the rebound is pushing property prices up in some projects - and buyers are still biting.

Despite prices increasing by 5.2 per cent on average last month, buyers seemed undeterred, said DMG analyst Brandon Lee.

'We attribute it to the buoyant HDB upgrader demand, pent-up demand, low interest rates and improved macro-economic landscape.'

More pent-up demand may still be on the way, from buyers who sold their previous units en bloc and have yet to buy another home, said DBS Vickers analysts Adrian Chua and Lock Mun Yee in a report published last week.

They also take heart from the fact that long-held fears of an impending surge of new units have failed to deflate the market.

'We believe we should not see a short-lived spike unless prices rise beyond economic fundamentals,' they added.

But not all analysts are so upbeat.

OCBC's Mr Foo Sze Ming has maintained a neutral rating on the property sector because he thinks that there will be no additional impetus for home sales to keep rising.

In fact, he said the number of unsold suburban homes rose last month for the first time in four months - evidence that the pent-up demand from HDB upgraders has been gradually met.
What is now helping to drive demand for new homes is sideline liquidity from investors who see a chance to get in on the action.

But he said it remains uncertain as to how long this can last. Unless wages start rising again or foreign funds start coming in to buy Singapore property - neither of which Mr Foo thinks is likely to happen soon - the recovery may well peter out.

Of the stocks that analysts are now bullish about, City Developments seems one of the most popular due to its relatively large exposure to the Singapore residential market.

UOB Kay Hian and DBS also like Ho Bee, which has both mid-end and high-end projects, and Allgreen, which has at least two mid-tier projects launch-ready.

Bank Of America Posts Lower Q2 Profit

(RTTNews) - Financial services firm Bank of America Corp. (BAC: News ) Friday reported lower profit for the second quarter, hurt primarily by higher provision for credit losses and merger and restructuring charges. Strong performance of wholesale capital markets businesses and home loans led a significant rise in the company's revenues for the quarter. The bank also warned that continuing challenges in the global economy will affect its performance for the remainder of the year and into 2010.

Bank of America's second-quarter net income was $3.22 billion, down from $3.41 billion in the same quarter last year. Net income applicable to common shareholders declined to $2.42 billion from $3.22 billion in the year-ago quarter. On a per-share basis, the bank's net earnings were $0.33, compared with $0.72 in the previous year.

Analysts polled by Thomson Reuters expected the company to report earnings of $0.28 per share for the quarter. Analysts' estimates typically exclude special items.Pretax, pre-provision income on a fully-taxable equivalent basis totaled $16.1 billion, up from $11.1 billion a year earlier.

The bank's total revenue, net of interest expense on a fully taxable-equivalent basis, rose 60% to $33.1 billion from $20.7 billion a year ago. Total revenue net of interest expense was $32.77 billion, up from $20.41 billion in the same quarter last year. Sixteen analysts had consensus revenue estimate of $33.10 billion for the quarter.

The bank said that results were driven by continued strong revenue performance in the wholesale capital markets businesses as well as in home loans, complemented by the previously announced gains on the sale of China Construction Bank, or CCB, shares and the sale of the company's merchant processing business to a joint venture.

The positives, however, were somewhat offset by continuing high credit costs, including additions to the reserve for loan and lease losses, as well as significant negative credit valuation adjustments on certain liabilities including the Merrill Lynch structured notes and the impact of a special Federal Deposit Insurance Corp., or FDIC, assessment.

Bank of America also reported a 9% rise in its second-quarter net interest income on a fully taxable-equivalent basis to $11.9 billion from $10.9 billion in the second quarter of 2008. The company attributed the net interest income growth to an improved rate environment and the addition of Countrywide and Merrill Lynch.

Non-interest income rose to $21.1 billion from $9.8 billion last year, including a $3.8 billion pretax gain from the completed sale of the merchant processing business to a joint venture. The non-interest income growth was also driven by a $5.3 billion pretax gain on the sale of CCB shares. Bank of America continues to own approximately 11% of the common shares of CCB.

JPMorgan Profits From Investment Bank; Defaults Rise

July 16 (Bloomberg) -- JPMorgan Chase & Co., the second- largest U.S. bank, said profit rose for the first time since 2007 on record investment-banking fees. Chief Executive Officer Jamie Dimon predicted more losses on consumer loans.

Second-quarter earnings increased to $2.7 billion, or 28 cents a share, from $2 billion a year earlier, the New York- based bank said today in a statement. The average estimate of 14 analysts surveyed by Bloomberg was 5 cents a share, including costs to repay government bailout funds and an assessment by the Federal Deposit Insurance Corp.

Investment-banking revenue from trading and stock and bond underwriting is helping offset rising defaults on consumer loans, such as mortgages and credit cards. Dimon said he doesn’t expect the card business to make a profit this year or in 2010, and the company increased its loss projections for prime and subprime mortgages.

“The credit problems, although they have stabilized, we’re still not out of the woods,” said Gerard Cassidy, a banking analyst at RBC Capital Markets in Portland, Maine, in a Bloomberg Radio interview. “For JPMorgan Chase, the challenge going forward is going to continue to be deterioration of credit.”

Goldman Q2 2009

NEW YORK, July 14 (Reuters) - Goldman Sachs Group Inc (GS.N) said the risk it encountered in commodities trading declined in the second quarter compared with a year ago, but revenues from the sector combined with fixed income and currencies were still at a record level.

Wall Street's leading investment bank said the FICC side of its business -- made up of fixed income, currencies and commodities -- generated $6.8 billion to help make the quarter ended June 26 its best ever with total revenues of $13.8 billion.

Singapore Q2 property prices drop 5.9 percent

Singapore real estate prices fell in the April-June period for a fourth straight quarter amid the city-state's worst ever recession.

Private residential property prices fell 5.9 percent in the second quarter from the previous quarter after plunging 14 percent in the first quarter, the Urban Redevelopment Authority said Wednesday.

The property survey was carried out in the first 10 weeks of the quarter, and the authority said it plans to release more complete figures later this month.

Singapore's gross domestic product fell a seasonally adjusted, annualized 14.6 percent in the first quarter. The government expects the economy to shrink as much as 9 percent this year.

Madoff Trial

NEW YORK (AFP) - - Wall Street swindler Bernard Madoff was sentenced Monday to 150 years in jail for masterminding an "evil" multi-billion-dollar investment scam that cheated thousands of people around the world.

"It is the judgment of this court that Bernard Madoff should be sentenced to 150 years in jail," Judge Denny Chin said as he handed down the maximum term possible on 11 charges of fraud, theft and perjury.

He described Madoff's crimes as "extraordinarily evil" and said it was "not merely a bloodless crime that takes place on paper but one that takes a staggering human toll."

The tough sentence came even after Madoff, the former chairman of the Nasdaq, made a courtroom apology to his victims. "I am sorry," he told them simply. "I don't ask for forgiveness."