Morgan Stanley tops estimates as equities trading revenue beats expectations by $909 million
Morgan Stanley topped expectations on the top and bottom lines for the third quarter.
Key points
- Morgan Stanley's Q3 profit rose 6.5% to $4.91 billion, or $3.03 per share.
- Equities trading revenue jumped 41% to $5.8 billion, beating estimates by $909 million.
- Fixed income trading and investment banking revenue missed expectations, and shares fell 3%.
Morgan Stanley reported third-quarter results that exceeded analyst expectations, driven by strong performance in its equities trading business. The company said profit increased 6.5% to $4.91 billion, or $3.03 per share, while revenue rose 12% to $20.34 billion.
The equities trading division posted a 41% revenue increase to $5.1 billion, surpassing the StreetAccount estimate by about $909 million. Morgan Stanley attributed the gains to broad strength across its equities products and regions, with Asia noted as a particular standout.
Mixed results across other units
Fixed income trading revenue fell 7% to $2.01 billion, about $260 million below expectations, due to declines in credit and commodities. Investment banking revenue edged up 2% to $2.16 billion, roughly $110 million short of estimates, as higher advisory revenue from completed mergers was offset by lower equity and fixed income underwriting.
Wells Fargo analyst Mike Mayo described the quarter as "good, but not great" in a note on Wednesday, pointing to slower improvement in some business metrics. Morgan Stanley shares declined about 3% in midday trading.
The interaction of the AI phenomenon and geopolitics has been the dominant reality the whole year.
— Ted Pick
CEO on AI and geopolitics
Morgan Stanley CEO Ted Pick told CNBC's Leslie Picker on Wednesday that the economy is being shaped by two key forces: the boost from the AI buildout and the drag from geopolitical strife. He noted that concerns over overseas conflict, inflation and surging yields slowed activity across Wall Street starting in early September.
Pick said the interaction of AI and geopolitics has been the dominant reality all year, calling them "two very different stories." He added that he is "cautiously optimistic" about markets in the fourth quarter.
