Morgan Stanley successfully concluded the current earnings season, reporting a net profit of $3.2 billion in the third quarter, which represents a 32 percent increase compared to the previous year. The largest US investment banks recorded a total revenue of $36 billion from deals and trading, supported by volatile markets and increased corporate debt, which fueled a recovery on Wall Street.
Despite a decline in profits compared to the previous year, the banks were able to exceed analysts' expectations. Especially noteworthy is Morgan Stanley's investment banking division, which managed to increase its fees by more than 50 percent to 1.5 billion US dollars—a higher increase than all competitors. This impressive performance contributed significantly to the record stock price, which at times rose over 7 percent to an all-time high.
We are optimistic that the recovery in IPOs and mergers and acquisitions will follow the strong demand for bonds," said CEO Ted Pick. This confidence is also reflected in forecasts that capital market activities have not yet reached their peak. CFO Sharon Yeshaya added: "Asset prices are rising, there is some market volatility, but investment banking revenues have not yet peaked.
The mergers and acquisitions (M&A) were particularly active, with over 2 trillion USD in completed deals in the first nine months of 2024. These transactions are expected to lead to lucrative investment banking fees in the coming months. Although private equity activity has been moderate so far, bankers predict an improvement in the coming months.
Here's the translation of the heading into English:
"Apart from Investment Banking, Morgan Stanley also benefited from an increase in trading activities. Revenues from equity trading rose by over 20 percent to 12.4 billion USD, supported by rising markets in the USA, volatility in Japan, and China's economic stimulus at the end of the third quarter. In contrast, revenues from fixed income trading fell by 2 percent to 16 billion USD, as expectations regarding US interest rates did not fully offset the declining activity in commodity trading.
In the area of wealth management, Morgan Stanley recorded nearly twice as many net new investments in the last quarter compared to the previous year and now managed almost 6 trillion US dollars in client assets. However, clients held a higher proportion of their assets in cash, which is less lucrative for banks.
The positive earnings development and robust sales bolster investors' hopes for an economic "soft landing" - a scenario in which the US economy grows without a recession. Shares of major US banks reached their highest levels since the collapse of Silicon Valley Bank on Friday, strengthening confidence in the sector's stability.
