Morgan Stanley (MS, Financial) is trading higher after reporting strong Q3 earnings. This marks the third consecutive double-digit EPS beat, significantly surpassing Q2's performance. Revenue increased by 15.9% year-over-year to $15.38 billion, exceeding expectations by over $1 billion.
- Institutional Securities: Revenue increased 20.2% year-over-year to $6.82 billion, driven by robust performances in Equity and Fixed Income due to heightened client activity. Investment Banking revenue surged 56% year-over-year to $1.46 billion, with fixed income underwriting more than doubling. Equity revenue grew by 21%, fueled by increased client activity, especially in the Americas and Asia.
- Investment Banking: Strong performance attributed to improved underwriting markets and increased participation by financial sponsors and corporates. Global activities, including the Bank of Japan's policy changes and China's stimulus, contributed to the segment's outperformance.
- Wealth Management: The largest segment saw a revenue increase of 13.5% year-over-year to $7.27 billion, driven by higher asset levels and positive fee-based flows.
- Investment Management: Revenue rose 9% year-over-year to $1.46 billion, with asset management and related fees increasing due to higher average AUM and market levels.
- Total client assets have increased by nearly $1.4 trillion over the past year, reaching $7.6 trillion across Wealth and Investment Management, targeting $10 trillion.
This quarter was exceptional for Morgan Stanley, aligning with strong performances from other investment banks. Notably, investment banking revenue saw significant growth for the second consecutive quarter, primarily due to a doubling in fixed income underwriting.
Morgan Stanley's substantial exposure to Wealth Management, larger than many peers, benefits from the Fed's rate cuts and a bullish stock market, boosting investor assets. With plans to reach $10 trillion in client assets, this area is expected to drive future earnings growth. The stock recently broke its $90-110 trading range, reaching new all-time highs, supported by this strong report.
