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Morgan Stanley’s third-quarter earnings beat analyst estimates, buoyed by revenue gains across all of its business lines, including double-digit increases in wealth management and investment banking.
The New York-based investment bank reported net income of $3.2 billion, or $1.88 per share, up from $2.4 billion, or $1.38 a share, in the year-ago quarter. The third-quarter earnings per share were 31 cents above consensus estimates, according to Nasdaq.
Similar to the firm’s second-quarter results, investment banking was a big contributor, generating revenues totaling $1.5 billion, up 56% from a year earlier.
Morgan Stanley’s total revenue of $15.4 billion for the three months ended Sept. 30 represented a 16% increase over a year ago.
Jeenah Moon/Photographer: Jeenah Moon/Bloomb
Noninterest revenue rose 17% to $13.2 billion. Asset management and trading, the two biggest drivers of noninterest income, posted revenue gains of 14% and 9%, respectively.
“With three quarters of 2024 on the board, we’re striking a cadence we’ll execute against,” CEO Ted Pick said on a conference call with analysts.
Overall institutional securities revenues, which include the equity and fixed income business lines, in addition to investment banking, rose 20% from a year ago.
Wealth management revenues totaled $7.3 billion. Wealth management’s 28.3% pre-tax margin edged closer to Morgan Stanley’s 30% target. The margin for the three months ended June 30 was 26.8%.
“Total client assets have surpassed $7.5 trillion across Wealth and Investment Management supported by buoyant equity markets and net asset inflows,” Pick said in a press release. “Our business model is delivering strong returns while accreting capital, producing an ROTCE of 18.2% through the first three quarters of 2024. Our management continues to be focused on driving durable growth and realizing long-term returns for our shareholders.”
“Expanding markets and increased client engagement should further support asset growth as we progress toward $10 trillion in client assets,” Chief Financial Officer Sharon Yeshaya said on a conference call with analysts.
Investment management revenue totaled $1.5 billion, up 9% from a year ago. The increase was driven by a $72 million increase in asset management fees.
While compensation and operating expenses totaled $11.1 billion, an increase of 11% from a year ago, Morgan Stanley’s efficiency ratio declined to 72% from 75% in the third quarter of 2023, due to the increase in revenue.
“Morgan Stanley’s credit positive Q3 results reflected strong earnings contributions from both its investing banking and wealth management franchises, resulting in another quarter of positive operating leverage, pre-tax margin expansion, and a return on tangible equity of 17.5% that is among the highest of its peers,” Mike Taiano, vice president of the financial institutions group at Moody’s ratings, said in a statement.
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Provisions for credit losses fell to $79 million from $134 million a year ago. Morgan Stanley said the decrease was due to lower provisions in the commercial real estate sector.
