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Morgan Stanley’s quarterly profits rose 32 per cent to $3.2bn, making it the latest Wall Street firm to receive a boost from a recovery in investment banking and an uptick in stock trading.
The bank reported third-quarter net income up from $2.4bn a year earlier and ahead of analysts’ estimates, both overall and for individual divisions. Morgan Stanley shares were up more than 3 per cent in pre-market trading in New York.
Investment banking fees increased more than 50 per cent from a year ago to $1.5bn — a bigger jump than at its Wall Street rivals, though Morgan Stanley lags behind JPMorgan Chase and Goldman Sachs in overall revenues.
Chief financial officer Sharon Yeshaya said investment banking was still in the early stages of a recovery after two fallow years.
“It’s not peak capital market activity,” Yeshaya said. “Asset prices are up, there’s some volatility in the market, but investment banking revenues . . . are not yet at their peak. We still have more to go as we go through this capital market recovery.”
Revenues at the group’s equities trading business rose 21 per cent to $3bn, outstripping a more modest increase in its smaller fixed income trading unit.
Stock trading activity was boosted by rising markets in the US, volatility in Japan and China’s stimulus programme at the end of the third quarter.
Morgan Stanley’s wealth management business, which has almost $6tn in client assets, attracted net new assets of $64bn during the quarter, almost twice the figure of a year ago.
However, Morgan Stanley’s clients have been keeping a higher proportion of their wealth in cash, which can be less lucrative for banks.
Yeshaya said clients’ cash levels had settled from the elevated levels of the coronavirus pandemic but were still higher than before the first Covid-19 outbreak.
https://www.ft.com/content/a741f162-0035-4135-aeca-6612fbfa43b8
