Morgan Stanley's earnings jump, helped by trading

AP News
Posted: Oct 19, 2016 8:21 AM
Morgan Stanley's earnings jump, helped by trading

NEW YORK (AP) — Morgan Stanley said its earnings soared 62 percent in the third quarter, thanks to big gains in bond trading.

The New York-based investment bank said Wednesday it earned $1.52 billion after payments to preferred shareholders, up from $939 million in the same period a year earlier. Earnings per share, excluding an accounting adjustment, were 81 cents versus 34 cents a year earlier.

The results beat forecasts. Analysts surveyed by FactSet expected the bank to earn 63 cents per share.

Like its major competitor Goldman Sachs, Morgan Stanley had a strong quarter on its trading desks, particularly bond trading. Overall revenue from trading jumped to $4.6 billion from $3.5 billion, excluding an accounting adjustment.

Bond sales and trading revenue jumped to $1.5 billion, nearly triple the $583 million figure from a year earlier. Stock trading revenue edged up to $1.9 billion from $1.8 billion.

Revenue from wealth management rose to $3.9 billion from $3.6 billion. Assets under management increased $13.5 billion in the quarter. Morgan Stanley has been building up its wealth management as a more stable driver of earnings compared with trading, which can ebb and flow with market volatility.

"Overall the results reflect steady progress against our long term strategic goals," said Morgan Stanley CEO James Gorman said in a prepared statement.

Return on common equity, a closely watched metric for investment banks, rose to 8.7 percent, a big improvement from 5.6 percent in the same period a year earlier.

Revenue rose to $8.91 billion from $7.77 billion.

Morgan Stanley's stock rose 1 percent in pre-market trading.