In an environment where global banks are seeking to balance volatile markets, regulatory challenges and pressures for efficiency, Morgan Stanley is managing to maintain its composure. The firm continues to benefit from the long-term transformation of its business model - from an investment bank to a fully integrated financial conglomerate with strong fundamentals in asset management, trading and active investment management. This allows it not only to weather short-term fluctuations, but also to generate a predictable flow of income and capital in an environment where most traditional players flounder.

While parts of the sector are struggling with the implications of tighter capital requirements and rising costs, Morgan Stanley $MS remains in a defensively-strong position. Consistent results, a disciplined cost base and careful capital management are the key building blocks of the strategy that the new management under Ted Pick has firmly in place. The second quarter thus represented…