A banner quarter for Morgan Stanley. Its quarterly profit grew 25% amid a recession and crushed analysts expectations, wrapping up a mixed third quarter earnings season for the big U.S. banks.
Morgan Stanley’s trading revenue shot up 20%. Equities underwriting did even better, with revenue more than doubling amid a rash of big IPOs such as Snowflake and Warner Music. But revenue from underwriting bonds fell due to a drop in loan issuances.
Even as trading returned to the spotlight, CEO James Gorman has been beefing up the company’s asset and wealth management businesses to shield the bank from volatility in its trading and investment banking businesses. Revenue from wealth management rose 7% in the latest quarter.
Shares of Morgan Stanley rose in early trading Thursday.
It was a tale of two types of banks in the third quarter: Wall Street powerhouses focused on trading such as Morgan Stanley and Goldman Sachs clocked big gains. Their trading revenue surged as clients bought and sold stocks in response to the pandemic and companies rushed to go public. Goldman on Wednesday posted its best quarterly performance in a decade. But traditional banks focusing on retail customers such as Citigroup and Bank of America struggled. Low interest rates, provisions for bad loans and lower consumer spending hurt their results.