Morgan Stanley profits increase by a third during Wall Street’s boom

Morgan Stanley beat profit expectations on an impressive third quarter in investment banking, which also boosted rivals and sent its stock to record levels.

The American bank announced that its profit increased 32 percent to $3.2 billion during the third quarter. It is the latest Wall Street institution to exceed analysts’ expectations.

Morgan Stanley’s shares rose $7.29 or 6.5% to $119.51 at the close of New York trading on Wednesday, marking a new record.

This year, American banks were boosted by an increase in corporate debt, mergers and initial public offerings, as well a surge in equity trading.

Morgan Stanley ‘s revenue from Investment Banking grew 56 percent to $1.46 Billion in the third quarter. Goldman Sachs, JP Morgan Chase and other rivals have seen gains of between 20 and 31%. Equity trading revenue increased by 21 per cent, to $3 billion. Fixed income revenue grew 3 per cent, to $2 billion.

Wall Street executives, encouraged by the hope that the US Federal Reserve would continue to reduce interest rates are optimistic about a revival of mergers and purchases after a dry spell of two years.

Ted Pick, the 55-year-old chief executive officer of Morgan Stanley said: “Improved markets for underwriting, coupled with increased participation from financial sponsors and corporations across investment banking support a positive outlook.”

A broadening stock market and a changing interest rate policy provide a favorable backdrop for our markets.

According to Dealogic, global revenue from investment banking grew 21 percent in the first nine month of the year. North America saw the largest increase, at 31 percent, with data. Morgan Stanley was able to earn the fourth-highest fees in the world during the period.

Sharon Yeshaya is the chief financial officer of Morgan Stanley. She said, “We’re seeing an increase in equity capital market activity, led by financial sponsors. This includes initial public offerings not only in the US, but also in Europe.”

The bank was the lead underwriter for a number significant initial public offerings during the quarter. These included Lineage, a cold storage company based in Michigan and StandardAero aeroplane engine service provider.

Morgan Stanley’s former chief executive, and current chairman James Gorman (66), wanted to move away from the volatility of trading and investment banking.

The third-quarter revenue for wealth management increased from $6.40 billion to $7.27 compared to a year earlier. Net new assets of $64 billion were added to the business, and total assets for clients reached $6 trillion.

Pick stated that “total client assets in wealth and investment management have exceeded $7.5 trillion, supported by buoyant equity market and net asset flows.”

Investment management revenues grew 8.9% to $1.5 billion due to higher asset management fees and management.

Pick, the chief executive who was appointed a year earlier, is a former head of Morgan Stanley’s investment banking division. He began working at the bank in 1990, and he rose to the position of managing director by 2002. Six years later he joined its management committee.

Macrae Sykes said that Gabelli Funds is “executing well across all segments”. He continued: “Ted Pick quickly established a leadership position and investor confidence.”