Morgan Stanley beat analysts' estimates for sales and earnings in the third quarter, driven by better-than-expected results from the company's Wall Street trading.
The bank said in a press release Thursday that earnings were up 25% year over year to $ 2.72 billion, or $ 1.66 per share, beating Refinitiv's estimate of $ 1.28. It had sales of $ 11.7 billion, 16% more than a year earlier and $ 1 billion more than the estimate.
Morgan Stanley, who was the most aggressive acquirer on Wall Street with $ 20 billion acquisitions that year, appeared to be shooting at all cylinders. The company's traders led the outperformance, generating $ 400 million more in revenue than analysts expected, largely due to trading in bonds.
However, the bank also beat estimates in its wealth management and investment management areas, generating more than $ 200 million more in revenue than expected each.
"We achieved strong quarterly results as the markets remained active during the summer months and our balanced business model continued to deliver consistently high returns," said CEO James Gorman in the press release.
The bank's bond trading business posted its highest revenue in a decade in the third quarter, helping the company's total revenue hit a record post-financial crisis this year, CFO Jon Pruzan told analysts on Thursday.
The company is aiming to resume its share buyback as early as the first quarter of 2021, Gorman said on the conference call, with the exception of an economic collapse in the US.
The company's shares rose 1.3%. Morgan Stanley stocks are virtually unchanged through Wednesday this year, outperforming the KBW Bank Index decline by more than 30%.
Under Gorman, Morgan Stanley highlighted its wealth management division, which benefits from rising markets as fees typically rise along with assets under management. He has redoubled his urge to move away from Morgan Stanley's traditional strengths in trading and investment banking.
Last week he announced that his bank is acquiring Eaton Vance for $ 7 billion, adding strength and scope to the smallest of the bank's three main businesses, investment management. In February, he announced the acquisition of discount brokerage E-Trade for $ 13 billion.
Analysts had high expectations for the company's trading activity after JPMorgan Chase and Goldman Sachs both beat estimates for better-than-expected market revenues.
Morgan Stanley is the last of the six largest US banks to report earnings for the third quarter. JPMorgan, Goldman Sachs and Citigroup outperform analysts' earnings expectations as they incorporate smaller risk provisions. Bank of America and Wells Fargo were disappointed as companies grappled with the impact of lower interest rates.
This is how the company did it:
Earnings: $ 1.66 per share versus $ 1.28 estimate by analysts surveyed by Refinitiv.
Revenue: $ 11.7 billion versus $ 10.64 billion.
Asset Management: $ 4.66 billion in revenue versus $ 4.45 billion estimate by FactSet.
Investment Management: $ 1.06 billion in revenue versus $ 856 million estimate.
Trading: Stock sales of $ 2.26 billion versus an estimate of $ 2.19 billion, fixed income sales of $ 1.92 billion versus an estimate of $ 1.59 billion.