Morgan Stanley posts earnings beat driven by strong trading revenue

Morgan Stanley posts earnings beat driven by strong trading revenue”

But a surge in equity underwriting revenues helped spur growth in the segment, with Morgan Stanley benefiting from IPOs, follow-on offerings, and blocks as clients continued to access capital markets.

Morgan Stanley's investment bankers posted revenue of $1.71 billion, beating the $1.6 billion analyst estimate.

The trading division topped analysts' estimates, driven by a 35% jump in fixed-income revenue that was second-best among the big banks.

Morgan Stanley followed suit, reporting a 20% rise in trading revenue and a 118% rise in stock underwriting. Net income rose to $2.72 billion, or $1.66 a share, from $2.17 billion, or $1.27 a share, in the year-ago period, beating the FactSet earnings consensus of $1.28 a share.

Net income applicable to common shareholders rose 26% to $2.60 billion in the quarter ended September 30.

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Wealth Management delivered pre-tax income of $1.1 billion with a reported pre-tax margin of 24.0% (or 25.3% excluding the impact of a regulatory charge in the third quarter).

"Big investment banks are the easiest financial stocks to own because they have comparatively small loan portfolios (which are the biggest risk) but have upside earnings leverage to the now active capital markets". In the comparable quarter of previous year, it had reported a lower £1.68 billion of net income or 98 pence per share. Experts had forecast a much lower £2.59 billion of revenue from sales and trading in the recent quarter.

Moody's Investors Service upgraded the bank's credit rating earlier this month, which would lower its borrowing costs and make its traders more competitive.

"For a decade now, we've been rebuilding Morgan Stanley from the depths of the crisis to a position to withstand whatever comes our way", Mr. Gorman said Thursday. "There's an emerging view that the election will not be as clear as has historically been the case". The two divisions are becoming even more important for revenue, as assets swell with the firm's new purchases.

The biggest banks were buoyed mostly by their Wall Street arms, with trading revenue rising between 4% at Bank of America Corp. and 30% at JPMorgan Chase & Co. The Eaton Vance acquisition is expected to wrap up in the middle of next year. Revenue from wealth management rose 7% in the latest quarter.

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