New Delhi

Morgan Stanley has outperformed Wall Street’s expectations for its third-quarter earnings, with a remarkable 32 per cent rise in profit, driven by strong showings across its core divisions: wealth management, investment banking, and trading as detailed in a report by CNBC. 

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The US-based investment bank reported a profit of $3.2 billion, or $1.88 per share, surpassing the $1.58 per share estimate. Total revenue increased 16 per cent, reaching $15.38 billion, significantly above the $14.41 billion forecast.

Boost from wealth management

Morgan Stanley's wealth management division, which constitutes a substantial part of the bank’s operations, played a pivotal role in the robust earnings. Revenue from this sector surged by 14 per cent to $7.27 billion, surpassing the StreetAccount estimate of $6.87 billion. The division benefited from buoyant market conditions and increasing client activity as markets improved throughout the quarter.

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CEO Ted Pick expressed optimism about the firm’s future, noting, “The firm reported a strong third quarter in a constructive environment across our global footprint.” The positive market environment coupled with proactive strategies across business divisions contributed to the stellar results.

Investment banking rebound

After a challenging 2023 for investment banking, Morgan Stanley witnessed a 56 per cent jump in revenue from the sector. Revenue came in at $1.46 billion, exceeding analysts’ predictions of $1.36 billion. The return of mergers and acquisitions, alongside debt and equity underwriting activities, helped the investment banking arm recover significantly.

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Notably, the Federal Reserve's decision to cut interest rates during the quarter created a conducive environment for financing and deal-making, a critical factor for the bank’s resurgence in this space.

Strong performance in trading

The bank’s trading divisions also posted robust results, contributing to the overall earnings beat. Equity trading revenue increased by 21 per cent to $3.05 billion, well above the estimated $2.77 billion. Meanwhile, fixed income trading edged up by 3 per cent to $2 billion, surpassing expectations of $1.85 billion.

The resurgence of investment banking and steady performance in wealth management and trading helped propel Morgan Stanley ahead of its competitors in the third quarter. Rival firms like JPMorgan Chase, Goldman Sachs, and Citigroup also posted strong results in the same period, reflecting broader gains across the financial services sector.

With a 7.5 per cent increase in stock value following the earnings report, Morgan Stanley appears well-positioned to maintain its growth trajectory in the coming quarters. The combination of resilient markets and a return to more active corporate deal-making offers a promising outlook for the firm’s future.