Morgan Stanley beats, has record-breaking quarter for wealth management

James gormanGettyMorgan Stanley CEO James Gorman.

Morgan Stanley on Wednesday reported third-quarter earnings that beat on the top and bottom lines.

The firm reported diluted earnings per share of $0.81 on revenue of $8.91 billion.

Analysts were expecting adjusted earnings of $0.63 a share on revenue of $8.14 billion, according to Bloomberg.

“This quarter we saw record revenues in Wealth Management and a strong performance in our Sales and Trading business,” CEO James Gorman said in a statement.

“While the environment was more challenging for our equity underwriting and asset management businesses, our expense initiatives remain on track.”

In wealth management, Morgan Stanley saw revenue of $3.88 billion — the highest on record, according to the firm, and up from $3.64 billion in the same quarter last year.

The firm also beat on trading and banking revenue in Q3. Here’s the breakdown:

  • Total trading revenue came in at $3.17 billion ($2.82 billion expected).
    • This included net losses of $192 million, compared with losses of $65 million a year ago because of lower corporate loan hedging activity.
  • Fixed income, currency, and commodities revenue was $1.48 billion ($1.01 billion expected).
    • This was up from $583 million in the year-ago quarter (ex-DVA), thanks to the credit and rates businesses, which saw improved market conditions.
  • Equity revenue came in at $1.88 billion ($1.83 billion expected).
    • This was up from $1.87 billion a year ago because of higher results in derivatives and cash equities, the firm said.
  • Investment-banking revenue was $1.10 billion ($1.08 billion expected), down from $1.18 billion in the year-ago quarter.
    • Advisory revenue of $504 million was down from $557 million a year ago because of fewer completed M&A transactions.
    • Equity-underwriting revenue of $236 million was down from $250 million in the year-ago quarter on “lower fees due to a shift in product mix,” the firm said.
    • Debt-underwiting revenue of $364 million was down from $374 million on lower loan fees.

In the same quarter last year, Morgan Stanley missed expectations, reporting earnings of $0.34 a share ($0.64 expected) on revenue of $7.8 billion ($8.6 expected).

In the second quarter, Morgan Stanley beat on the top and bottom lines, reporting EPS of $0.75 ($0.60 expected) on revenue of $8.91 billion ($8.31 billion expected).

JPMorgan, Citigroup, Wells Fargo, Bank of America, and Goldman Sachs have already reported third-quarter earnings, each one beating analyst expectations.

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