Morgan Stanley posted a 25 per cent increase in third-quarter profit, closing a mixed Wall Street earnings season on a high.
Lenders focused on trading have booked big gains for the quarter, while those with bigger retail operations have been hit harder by the coronavirus.
Like fellow trading powerhouse Goldman Sachs, Morgan Stanley was able to capitalise on surging market activity triggered by the pandemic, while more consumer-focused rivals like Citi and Bank of America were hit by historically low interest rates and rising losses from bad loans.
While Morgan Stanley’s trading unit did not hit the record highs of the previous quarter, the latest performance was still good enough to help the bank easily beat analyst expectations.
Revenue from the lender’s institutional securities division — Morgan Stanley’s largest breadwinner, housing its investment banking and trading businesses — rose 21 per cent to $6.06bn (£4.7bn).
Equities underwriting revenue more than doubled due to fees from a number of high-profile initial public offerings such as Snowflake, Royalty Pharma, KE Holdings Inc and Warner Music.
However revenue from underwriting bonds dropped from last year due to declines in loan issuances and muted dealmaking activity due to coronavirus.
“We delivered strong quarterly earnings as markets remained active through the summer months, and our balanced business model continued to deliver consistent, high returns,” said chief executive James Gorman.
Net income applicable to common shareholders rose to $2.60bn in the three months to 30 September, up from $2.06bn the previous year. Earnings per share rose to $1.66 from $1.27 for the same period in 2019.
Analysts had been expecting a profit of $1.28 per share, according to a poll by Refinitiv. Morgan Stanley’s revenue also comfortably beat estimates, rising 16 per cent to $11.7bn.
Shares in the bank rose 0.69 per cent in early trading in New York.