(Reuters) -Morgan Stanley’s profit jumped in the third quarter as investment bankers brought in more fees from advising on deals and by underwriting stock and debt sales.
Shares of the bank rose 2.1% in premarket trading on Wednesday.
A string of large deals pushed global mergers and acquisitions activity past the $3 trillion mark this year. A resilient U.S. economy, optimism around interest-rate cuts and lighter regulations under the Trump administration have spurred businesses to do deals or tap capital markets.
With markets hovering near record highs and the U.S. Federal Reserve resuming its rate-cutting cycle in September, bankers are optimistic that the momentum will continue through fourth quarter and into 2026.
Morgan Stanley’s investment banking revenue jumped 44% to $2.11 billion in the quarter from a year ago.
“Our Integrated Firm delivered an outstanding quarter with strong performance in each of our businesses globally,” CEO Ted Pick said in a statement.
Total revenue was a record $18.2 billion in the quarter.
The bank posted a net income of $4.6 billion, or $2.80 per share, for the three months ended September 30, it said on Wednesday. That compares with $3.2 billion, or $1.88 per share, a year ago.
ECM SHINES
Equity capital markets roared back during the quarter, led by a wave of high-profile IPOs. Record-breaking stock market levels also emboldened companies to pursue follow-on equity offerings and convertible bond deals.
Morgan Stanley’s equity underwriting revenue jumped to $652 million from $362 million a year earlier.
The bank was among the joint bookrunners on large IPOs during the quarter, including design software maker Figma and Swedish fintech Klarna.
Wall Street rivals, including JPMorgan Chase and Goldman Sachs, also benefited from a surge in M&A and initial public offerings (IPOs).
WEALTH MARGINS
Revenue from wealth management – a key focus for Morgan Stanley – jumped to record $8.2 billion in the quarter, buoyed by rising market valuations.
The unit’s pre-tax margin was 30.3% in the quarter, meeting its long term goal.
Wealth management provides Morgan Stanley with stable revenues, that provide a cushion against the volatility of trading and investment banking.
The business added net new assets of $81 billion in the quarter, while fee-based asset flows were $42 billion.
Total client assets across wealth and investment management reached $8.9 trillion in the quarter, getting closer to the bank’s target of managing $10 trillion in client assets.
(Reporting by Arasu Kannagi Basil in Bengaluru and Tatiana Bautzer in New York, editing by Lananh Nguyen)
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