Morgan Stanley’s third-quarter profit tops estimates

Morgan Stanley reported record revenue in its wealth management division for the third quarter, surpassing market expectations. The division’s revenue reached $7.27 billion, a 13.5% increase from the same period last year and exceeding the FactSet consensus estimate of $6.88 billion. The asset management segment also experienced significant growth, with revenue increasing by 17.6% to $4.27 billion. Transactional revenue saw a remarkable 58.7% jump to $1.08 billion, although net interest income fell by 9.1% to $1.77 billion. During the quarter, the business added $63.9 billion in new assets, a substantial increase from the $35.7 billion added in the previous quarter. This brought the total client assets under management to $6 trillion. Morgan Stanley’s strong performance in the wealth management sector has contributed to a significant increase in its stock price, reflecting investor confidence in the company’s continued expansion and robust performance. An investment banking surge at Morgan Stanley further solidified its position on Wall Street, with profits in the third quarter exceeding analyst expectations. Investment banking fees jumped 56% from a year ago to nearly $1.4 billion, the largest increase among big banks. The rise in investment banking and trading helped Morgan Stanley increase its net profit by 32% from a year earlier to $3.2 billion. These results confirm a broad rebound across Wall Street operations of the country’s biggest banks, with investment banking fees and equity trading revenue also increasing at JPMorgan Chase, Wells Fargo, Goldman Sachs, Bank of America, and Citigroup.

Trending gains boost Morgan Stanley

Bank executives are optimistic that the start of an interest rate-cutting cycle at the Federal Reserve will lead to more deals in the near future. Morgan Stanley CEO Ted Pick stated, “The firm reported a strong third quarter in a constructive environment across our global footprint,” citing “momentum in the markets and underwriting businesses on solid client engagement. Morgan Stanley beat analyst expectations in dealmaking fees from its bond underwriting and M&A advisory unit, as well as revenues for its trading and wealth management divisions. Its total net revenue rose by 16% to $15.4 billion. Fixed income and equities trading revenue surged 13% to $5 billion, largely driven by equities. The stock rose by more than 7% as of market close, pushing its price 29% higher since the beginning of January and outperforming rivals Bank of America and Citigroup. The wealth management division, which provides financial advice to higher-net-worth individuals, also performed well. Net new assets in that division rose 79% from a year ago and 76% from the last quarter to $64 billion, with revenues increasing by 13.5% from a year ago and 7% from the last quarter to $7.3 billion. The third quarter performance bodes well for CEO Ted Pick, who is still in his first year as top boss. Since the announcement of Pick taking over for longtime CEO James Gorman, the firm’s stock has outperformed major stock indexes, rising 57% for that period. Gorman plans to step down from the executive chairman role at the end of this year. Pick added, “Our management continues to be focused on driving durable growth and realizing long-term returns for our shareholders.”