By Morgan Stanley’s stock surged over 3% in premarket trading after the financial giant posted better-than-expected third-quarter earnings, driven by a robust performance in its investment banking division.
The company exceeded analysts’ profit forecasts, showcasing the strength of its diverse business segments and integrated model.
For the quarter ending September 30, 2024, Morgan Stanley reported earnings per share (EPS) of $1.88, surpassing the consensus estimate of $1.59 by $0.29.
The firm also posted revenues of $15.4 billion, a 15.8% year-over-year increase from $13.3 billion, beating analyst expectations of $14.32 billion.
The company’s Institutional Securities division led the charge, with net revenues rising 20.2% year-over-year to $6.8 billion.
This growth was fueled by strong performances in both equity and fixed-income trading, alongside a 56% surge in investment banking revenues.
A booming market for equity and fixed-income underwriting played a key role in these gains.
Morgan Stanley’s Wealth Management segment also delivered impressive results, reporting record net revenues of $7.3 billion, up 13.5% year-over-year.
The division added $64 billion in net new assets, pushing total client assets to a staggering $6 trillion.
CEO Ted Pick commented on the results, saying, “Morgan Stanley’s strong third-quarter results reflect our global footprint and integrated business model, delivering high returns while growing capital.”
The company reported a Return on Tangible Common Equity (ROTCE) of 18.2% for the first three quarters of 2024.
In addition, Morgan Stanley bolstered its financial position, ending the quarter with a Standardized Common Equity Tier 1 capital ratio of 15.1% and adding $2.1 billion in capital.
The company also repurchased $0.8 billion in common stock and declared a quarterly dividend of $0.925 per share.
MS stock: wealth management expansion
Morgan Stanley’s strategy of expanding into wealth management, a priority under former CEO James Gorman, continues to pay dividends.
The wealth management division saw net revenues jump to $7.27 billion from $6.4 billion a year earlier, driven by strong asset management and transaction-related fees.
Total client assets in wealth and investment management have now surpassed $7.5 trillion, bringing Morgan Stanley closer to its goal of managing $10 trillion.
Investment management revenues also grew, rising to $1.5 billion compared to $1.3 billion in the same period last year, reflecting higher fees from asset management.
As MS stock continues to rise on these solid earnings, investors are watching how Morgan Stanley’s integrated model will further capitalize on favorable market conditions and ongoing growth in its wealth management and institutional securities divisions.
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