Morgan Stanley posted a 32% increase in third-quarter profit to $3.2 billion, or $1.88 per share, on better-than-expected wealth management, trading, and banking results.
Q3 highlights
Earnings topped LSEG’s estimate of 1.58 per share. Revenue jumped 16% to $15.38 billion, higher than the estimated $14.41 billion.
The banking giant’s total client assets have surpassed $7.5 trillion across its wealth and investment management division supported by buoyant equity markets and net asset inflows.
CEO Ted Pick said Wednesday the company’s business model is delivering strong returns while accreting capital, producing a return on tangible common equity (ROTCE) of 18.2% through the first three quarters of 2024. He said that institutional securities saw momentum in the markets and underwriting businesses on solid client engagement.
During the quarter, Morgan Stanley accrued $2.1 billion of common equity tier 1 capital and ended the quarter with a standardized common equity tier 1 capital ratio of 15.1%.
The stock hit an all-time high Monday and has jumped 19.51% year-to-date.
Buoyant markets
Morgan Stanley has benefited from several positive factors or tailwinds, driving its performance, starting with buoyant markets that helped its massive wealth management business, a rebound in investment banking after a dismal 2023, and strong trading activity.
The bank’s institutional securities net revenues of $6.8 billion reflect strong performance in equity and fixed income on higher client activity and increased momentum in investment banking.
During the quarter, wealth management delivered a pre-tax margin of 28.3%. The bank said that its record net revenues of $7.3 billion reflect strong asset management and transactional revenues.
Third-quarter investment management net revenues reached $1.5 billion, up from $1.3 billion a year ago. Pre-tax income was $260 million compared with $241 million a year ago.
