Morgan Stanley Shares Soar Most in 4 Years on Q3 Profit Surge

Morgan Stanley’s fixed-income trading business posted $2 billion in revenue, compared with estimates of $1.85 billion. That business line is the smallest among the big-five trading desks on Wall Street.

In equities, revenue totaled $3.05 billion. Equities gains have helped banks counter the slowdown in the fixed-income business, with a 27% surge at JPMorgan, and 18% at both Goldman Sachs Group Inc. and Bank of America Corp.

Yeshaya said the firm is still investing in that business. “Derivatives on the equities side is one I would point to,” she said. “There is also technology. That’s not something where you could stand still.”

Fees from advising on deals totaled $546 million, compared with estimates of $525 million. Equity-underwriting revenue was $362 million as the return of public listings and secondary offerings raised speculation those markets will fully reopen.

Morgan Stanley now oversees $7.6 trillion in assets across its investment management and wealth unit. The bank’s shares fell behind its peers at the start of the year, when Morgan Stanley’s top management sounded a more cautious tone on its ability to meet margin targets in the near term. Investors were also turning their attention to metrics such as net interest income with the prospect of rate cuts in the months ahead.

The firm’s results since then have countered those more measured forecasts.

The “value proposition” is in the firm’s wealth-advisory business, she said. “We have shown durable, sustainable growth and the opportunities ahead of us are extremely strong.”

Also in the results:

Revenue totaled $15.4 billion, compared with estimates of about $14.3 billion. The wealth-management business reported a pretax margin of 28.3%. Earnings per share were $1.88.