Morgan Stanley exceeded expectations for third quarter earnings and revenue on Thursday as the company posted record results in investment banking and wealth management.
Here are the numbers:
- Earnings: $ 1.98 per share versus the estimate of $ 1.68 per share by analysts surveyed by Refinitiv
- Revenue: $ 14.75 billion versus an estimate of $ 14 billion
Revenue and net income increased more than 25% year over year, aided by the acquisitions of E-Trade and Eaton Vance by CEO James Gorman, which strengthened the company’s wealth and asset management departments. The bank’s stock rose slightly in early trading.
“The company delivered another very strong quarter of robust revenues and improved efficiencies,” Gorman said in the press release. “We had outstanding performance from our integrated investment bank and record net new money of $ 135 billion in wealth management.”
While rival banks reported a slowdown in bond trading revenues in the third quarter, Morgan Stanley’s strength traditionally lies in its stocks business, the largest in the world.
Stock trading income rose 24% year over year to $ 2.88 billion, beating StreetAccount’s estimate by more than $ 500 million. Fixed income revenue declined 16% to $ 1.64 billion, beating the estimate of $ 1.53 billion.
Another thriving area is investment banking, which is being driven by robust mergers and initial public offerings, and Morgan Stanley is a top player there too. Rival advisor JPMorgan Chase posted record investment banking fees in the third quarter.
Morgan Stanley’s investment banking franchise delivered a 67% increase in revenue for the quarter to a record $ 2.85 billion.
The company’s massive wealth management division saw sales jump 28% to $ 5.94 billion. The increase was due to record wealth management revenues of $ 3.63 billion, thanks to rising stock values and rising financial advisor fees. Of course, Morgan Stanley’s wealth management division revenues were below StreetAccount’s forecast of $ 6.18 billion.
The bank’s share is up 44% this year by the close of trading on Wednesday, outperforming the KBW Bank Index’s 36% increase.
JPMorgan exceeded expectations on Wednesday, aided by a $ 1.5 billion surge on better-than-expected credit losses. Bank of America released results Thursday that exceeded analysts’ expectations as it benefited from better-than-expected credit losses and record advisory and asset management fees.
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