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Morgan Stanley’s quarterly profits jumped by almost half, as the core Wall Street businesses of investment banking and trading power forecast-beating results across America’s biggest banks.
On Wednesday, Morgan Stanley reported net income of $4.6bn for the three months to the end of September, up 45 per cent on last year and more than $1bn better than analysts had been expecting.
Investment banking drove the increase with $2.1bn in revenues, a 44 per cent improvement on the same quarter last year that was in line with its great rival Goldman Sachs. Goldman reported a 43 per cent increase in investment banking revenues to $2.7bn on Tuesday, while JPMorgan Chase could only manage more modest gains of 16 per cent to $2.6bn and Citigroup reported a 17 per cent rise to $1.2bn.
Morgan Stanley’s wealth management business also performed far better than expected, drawing in net new assets of $81bn in the quarter compared with the $67bn investors were looking for.
The figure is followed closely by investors as a gauge of the business’s growth trajectory, with Morgan Stanley’s revenues split relatively evenly between its investment bank and wealth management divisions.
Morgan Stanley’s earnings came on the same day as Bank of America, which also trounced expectations for its investment bank. BofA reported a 43 per cent rise in investment banking fees to just over $2bn. Analysts had only expected the business to bring in $1.6bn.
BofA also reported an 11 per cent rise in revenues in its markets division to $6.5bn, helping lift the bank’s profits by almost a quarter from the same period a year ago to $8.5bn.
Morgan Stanley shares were up more than 3 per cent in pre-market trading, while BofA was up almost 5 per cent.
