Thursday 14 October 2021 1:39 pm

Morgan Stanley beats expectations on booming deal making environment

Wall Street giant Morgan Stanley beat profit expectations for the third quarter, driven by a booming deal making environment.

The US bank notched $3.7bn in profits over the last three months, up around $1bn from the same period last year, it said today.

A sharp rebound in Morgan Stanley’s investment banking division led profits higher as the bank capitalised on strong demand for deal making . 

Income generated by the investment banking arm soared 67 per cent compared to last year, up to $2.8bn in the last quarter from $1.7bn in the same period last year.

Strong equity underwriting activity amid a rush from companies to list to capitalise on climbing equity markets, combined with high demand from smaller, less creditworthy business to issue debt to benefit from low rates boosted the investment banking division.

The bank’s earnings per share, a key measure of a company’s profitability, hit $1.98, above analysts’ expectations.

Its common equity tier one ratio, a measure of the strength of a bank’s balance sheet, edged down to 16 per cent from 17.4 per cent.

James P. Gorman, chairman and chief executive of Morgan Stanley, said: “The firm delivered another very strong quarter… We had standout performance of our integrated Investment Bank and record net new assets of $135 billion in Wealth Management.”