Morgan Stanley reported record earnings in investment banking and asset management on Thursday — profit and sales expectations for the 3rd quarter were exceeded.
The following are the figures:
Earnings per share were $1.98, compared to $1.68 expected by experts surveyed. Revenue: $14.75 billion, vs an expectation of $14 billion, according to Refinitiv.
CEO J. Gorman's purchases of Eaton Vance and E-Trade strengthened the businesses' wealth and asset management operations. They also raised revenue and net income by more than 25% year over year. The bank's stock increased by 1.5 percent.
"The Firm delivered another very excellent quarter, with greater revenues and increased efficiency," Gorman said in the statement. "Our integrated investment bank did very well, producing net new assets in wealth management of $135 billion."
While other banks reported a decline in fixed income trading revenue in the third quarter, Morgan Stanley's strength has always been in its world-leading stocks business.
Trading revenue grew by 24% year over year to $2.88 billion, exceeding StreetAccount's projection by more than $500 million. Revenue from fixed income decreased 16% to $1.64 billion, narrowly missing the $1.53 billion estimate.
Morgan Stanley is a prominent participant in investment banking, which has risen in prominence as a result of robust acquisitions and IPO activity. In the third quarter, JPMorgan Chase, a competing advisor, reported record investment banking fees.
Morgan Stanley's investment banking sector outperformed StreetAccount's prediction by more than $600 million in the third quarter, with revenue surging 67 percent to a record high of $2.85 billion.
The company's massive wealth management sector saw a 28 percent increase in revenue to $5.94 billion. Asset management revenues climbed to $3.63 billion, owing mostly to higher stock prices and greater fees from financial advisers. To be sure, revenue from Morgan Stanley's wealth management division fell short of StreetAccount's forecast of $6.18 billion.
As of Wednesday's closing, the bank's stock had risen 44 percent this year, outpacing the KBW Bank Index's 36 percent gain.
On Wednesday, JPMorgan surpassed Wall Street expectations owing to a $1.5 billion boost from lower-than-expected loan losses. On Thursday, Bank of America reported earnings that were above analysts' expectations, due to lower-than-expected loan losses and record advising and asset management fees.
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