Morgan Stanley closed Wall Street earnings high, with booming markets leading to a 25% rise in third-quarter earnings and fueling bank calls to allow shares to be repurchased.
The bank reported net income of $ 2.7 billion for the quarter, far better than the $ 2 billion forecast by analysts polled by Refinitiv. Revenue of $ 11.66 billion rose 16 percent year on year to $ 10.6 billion expected by analysts.
“Our shareholders holding the company have the right to earn a decent return on the capital they have invested in the company,” Morgan Stanley CEO James Gorman told analysts, criticizing the Federal Reserve. ban to America’s largest banks repurchasing their stock by at least the end of the year.
“There is absolutely no reason. . . “Why should we not distribute funds, other than that at the moment it is the right thing to do for the wider community?” Gorman told investors he hoped to get permission to continue the acquisitions in the first quarter and was open to return over 100 percent of quarterly profits once that happens.
The trade was the top performer for the third quarter and helped Morgan Stanley to its second highest quarterly earnings in history, reflecting the results from rival Goldman Sachs, who almost doubled third quarter earnings.
At Morgan Stanley, fixed income earnings rose 35% year-on-year to $ 1.9 billion – a smaller increase than Goldman’s 49% but better than the rest of Wall Street.
Shares of Morgan Stanley rose 14% to $ 2.3 billion, while investment banking earnings rose 11% to $ 1.7 billion. This is due to an increase of almost 120% in the fees for undertaking initial public tenders, which offset the decline in consulting revenues by 35% from year to year.
“I would say it was an extremely constructive and positive scenario,” Chief Financial Officer Jon Pruzan told the Financial Times, referring to a quarter in which shares rallied as the US Federal Reserve and the US government expanded huge liquidity in the markets.
“What we need are open and functional markets, which we clearly have and we need committed customers, something we clearly have,” he added.
Mr Pruzan said conditions in the fourth quarter were “very constructive” in the commercial markets and that the merger and acquisition pipeline had improved, echoing comments. by Goldman on Wednesday.
Strong market conditions also helped boost Morgan Stanley’s $ 200 million return on investment and loans.
Glenn Schorr, an analyst at Evercore ISI, wrote in a note to clients: “Although this wonderful scenery may not last forever, it is still quite good and [Morgan Stanley] continues to operate very well-balanced, more pay-based and steadily growing franchises. ”
The third quarter was big for Morgan Stanley Investment Management, which will soon be boosted by a $ 7 billion acquisition Eaton Vance announced last week. The split boosted revenue by 38 percent to $ 1 billion as it recorded net inflows and also benefited from asset growth during a strong market rally.
Morgan Stanley Wealth Management, which has just begun incorporating online stock company ETrade, increased revenue by 7% to $ 4.66 billion. Shares of Morgan’s Stanley rose slightly at the beginning of trading in New York.
Winnings close a mixed profit season. Profits from Bank of America, Citigroup, JPMorgan Chase and Wells Fargo recovered sharply as huge debt losses from the beginning of the year disappeared, but investors anxiety on the long-term attraction of low interest rates to profitability. Morgan Stanley and Goldman Sachs are less vulnerable to this because they have much smaller loan books.