Morgan Stanley Posts Better-Than-Expected Q3 Earnings Results As Investment Banking Revenue Outperforms

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Morgan Stanley 

The stock rose as much as 2 percent during the pre-market hours as the firm released its third-quarter earnings; profit and revenue exceeded the market expectations as the firm’s investment banking revenue and equity trading performed outstandingly. 

The Investment banking company reported net revenues of $14.8 billion for the third quarter ended September 30, 2021, while the analysts surveyed Refinitiv pegged Morgan Stanley’s revenue at $14 billion. Net income applicable to Morgan Stanley stood at $3.7 billion, or $1.98 per share, exceeding the estimate of $1.68 a share.

The firm’s provision for credit losses on loans and lending commitments fell to $24 million in the quarter ended, compared with $111 million during the same period last year. The decline is due to continued improvement in the macroeconomic environment, the bank said.

Morgan Stanley Quantale.io

The impact of the announcement on the dashboard of Quantale could be observed as the day proceeds. On Wednesday, social engagement for the stock of Morgan Stanley amongst the users of Twitter and Reddit spiked almost 19 percent combined with an increase of nearly 31 per cent in the trading volume.

A total of 9.82 million shares of the stock exchanged hands, 1.23 million below the average of 8.59 million.

Morgan Stanley stock opened its intraday at $101.22, up 2.6% from the previous day close of $98.57.

James P. Gorman, Chairman and Chief Executive Officer, said, “The Firm delivered another very strong quarter, with robust revenues and improved efficiency producing an ROTCE of 20%. We had a standout performance of our integrated Investment in real time stock market Bank and recorded net new assets of $135 billion in Wealth Management. Year-to-date, our successful integrations of E*TRADE and Eaton Vance have supported the growth of $400 billion in net new client assets across Wealth and Investment Management, bringing our total combined client assets to $6.2 trillion.”

Institutional Securities net revenues came in at $7.5 billion, up 67% compared with $6.1 billion a year ago reflecting record Investment Banking revenues led by advisory, persistent strong performance in Equity, and commendable results in Fixed Income. Pre-tax income stood at $3.0 billion, corresponding to $2.0 billion a year ago during the same period.

Equity net revenues increased 24% to $2.8 billion from $2.3 billion from a year ago, reflecting higher results across products because of strong client engagement in a favorable market environment, particularly in Asia.

Fixed Income net revenues came in at $1.6 billion, down 16% from a year ago record of $1.9 billion, mainly due to a decrease in Morgan Stanley’s macro businesses in a less volatile environment and lower results in their micro-businesses was impacted by tighter bid-offer and credit spreads. The firm’s Institutional Securities expenses increased to $4.4 billion compared to $3.9 billion during the same period, a year ago.

Morgan Stanley’s Wealth Management business reported an increase of 28% in net revenues for the current quarter, settling at $5.9 billion compared with $4.7 billion from a year ago.

The Investment Management division of Morgan Stanley reported net revenues of $1.5 billion, up 38% compared with $1.1 billion a year ago.

 

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