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Morgan Stanley Q3 Profit Up 26%; Results Top Estimates

morgan stanley 041917 15oct20 lt

Financial services firm Morgan Stanley (MS) reported Thursday a profit for the third quarter that increased 26 percent from last year, reflecting 16 percent revenue growth amidst strength across all business segments. Both adjusted earnings per share and quarterly net revenues topped analysts' expectations.

"We delivered strong quarterly earnings as markets remained active through the summer months, and our balanced business model continued to deliver consistent, high returns," said James Gorman, Chairman and CEO.

For the third quarter, the company reported net income applicable to the company's shareholders of $2.60 billion or $1.66 per share, down from $2.06 billion or $1.27 per share in the year-ago quarter.

Results for the latest quarter include intermittent net discrete tax benefits of $113 million which had an impact of $0.07 per diluted share.

Excluding items, adjusted earnings for the quarter were $1.59 per share, compared to $1.21 per share in the year-ago quarter.

On average, 21 analysts polled by Thomson Reuters expected the company to report earnings of $1.28 per share for the quarter. Analysts' estimates typically exclude special items.

Net revenues for the quarter increased 16 percent to $11.66 billion from $10.03 billion in the same quarter last year. The Street was looking for revenues of $10.64 billion for the quarter.

Institutional Securities net revenues grew to $6.06 billion from $5.2 billion, reflecting strong performance across all businesses with higher results in sales and trading and strength in equity underwriting.

Wealth Management net revenues also increased to $4.66 billion from last year's $4.36 billion, reflecting strong fee-based flows and significant increases in bank lending and deposits.

Investment Management net revenues were $1.06 million, up 38 percent from $764 million a year ago, driven by record asset management fees and Assets Under management (AUM).

The company's provision for credit losses on loans and lending commitments was $111 million, up from $51 million in the year-ago quarter.

The company's board of directors declared a $0.35 quarterly dividend per share, payable on November 13, 2020 to common shareholders of record on October 30, 2020.

Looking ahead, Gorman added that, "The completion of the E*TRADE acquisition, the subsequent ratings upgrade from Moody's, and the recently announced acquisition of Eaton Vance significantly strengthen our Firm and position us well for future growth."

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