Morgan Stanley third quarter profit beats estimates as trading powers results


© Reuters. FILE PHOTO: A sign is displayed on the Morgan Stanley building in New York

(Reuters) – Morgan Stanley (N:) posted a much better-than-expected 26% jump in third-quarter profit on Thursday, powered by another bumper quarter at its trading business as the COVID-19 pandemic drove up volatility in financial markets.

Net income applicable to common shareholders rose to $2.60 billion in the quarter ended Sept. 30, from $2.06 billion a year ago. Earnings per share rose to $1.66 from $1.27 a year ago. (https://mgstn.ly/3dvUT5T)

Analysts were looking for a profit of $1.28 per share, according to IBES data from Refinitiv. It was not immediately clear if the numbers were comparable.

Morgan Stanley’s performance largely mirrored that of chief rival Goldman Sachs (N:), which posted its best quarterly performance in a decade by some measures as trading moved back into the limelight.

Revenue from Morgan Stanley’s institutional securities division, which is the bank’s largest breadwinner and houses its investment banking and trading businesses, rose 21% to $6.06 billion as equity underwriting revenues more than doubled due to handsome fees from a number of high-profile initial public offerings.

But revenue from underwriting bonds declined from last year due to declines in loan issuances and muted dealmaking activity.

While Morgan Stanley’s trading unit turned in a strong quarter, it did not hit the record highs of the previous quarter.

The bank had already warned that the division would not perform as well in the third quarter as it had in the second, when it had benefited from huge swings in financial markets due to the coronavirus outbreak.

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