An investment banking surge at Morgan Stanley (MS) solidified a dealmaking revival across Wall Street, because the firm’s profits within the third quarter exceeded analyst expectations.
Fees from investment banking jumped 56% from a yr ago, the biggest leap amongst big banks, to just about $1.4 billion.
The pick-up in investment banking and a rise in trading helped Morgan Stanley push its net profit up by 32% from a yr earlier, to $3.2 billion.
The outcomes cement a broad rebound across the Wall Street operations of the country’s biggest banks. Investment banking fees and equity trading revenue also jumped at JPMorgan Chase (JPM), Wells Fargo (WFC), Goldman Sachs (GS), Bank of America (BAC) and Citigroup (C).
Executives at these banks have been optimistic that the beginning of an interest rate-cutting cycle on the Federal Reserve — which last month reduced its benchmark rate by 50 basis points — will mean more deals within the near future.
“The Firm reported a robust third quarter in a constructive environment across our global footprint,” Morgan Stanley CEO Ted Pick said in statement, citing “momentum within the markets and underwriting businesses on solid client engagement.”
Morgan Stanley beat analyst expectations in dealmaking fees from its bond underwriting and M&A advisory unit in addition to revenues for its trading and wealth management divisions.
Its total net revenue of $15.4 billion rose 16%. Fixed income and equities trading revenue surged 13% to $5 billion, driven largely by equities.
The stock was up by greater than 3% in early morning trading. As early Wednesday, it was up over 20% because the starting of January, trailing rises for a few of its other big-bank rivals.
One area of the corporate’s investment banking franchise that proved softer than analysts were hoping was its equity capital markets desk, which posted revenue of $362 million. Analysts were hoping for $12 million more.
One other brilliant spot that emerged Tuesday was Morgan Stanley’s recent performance in wealth management, which provides financial advice to higher-net-worth individuals.
Net latest assets in that division rose 79% from a yr ago and 76% from the last quarter, to $64 billion. Revenues were $7.3 billion, a 13.5% increase from a yr ago and a 7% rise from the last quarter.
The third quarter performance bodes well for Pick, who remains to be in his first yr as top boss.
For the reason that announcement that Pick would take over for longtime CEO James Gorman, the firm’s stock has outperformed major stock indexes. Its up 57% for that period. Gorman plans to step down from the manager chairman role at the tip of this yr.
“Our management continues to be focused on driving durable growth and realizing long-term returns for our shareholders,” Pick added in the discharge.
David Hollerith is a senior reporter for Yahoo Finance covering banking, crypto, and other areas in finance.
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