Morgan Stanley revenue jumps 50 pct on strong equities trading

REUTERS - Morgan Stanley's third-quarter revenue jumped 50 percent, helping adjusted earnings beat expectations, as higher income from equities sales and trading made up for a drop in the Wall Street bank and brokerage's fixed-income business.

Morgan Stanley reported net income of $888 million, or 44 cents per share, from continuing operations in the quarter. That compared with a loss of $1 billion, or 55 cents per share, a year earlier.

The year-earlier figure included a charge of $2.3 billion to reflect a rise in the value of Morgan Stanley's debt.

Excluding items, Morgan Stanley earned 50 cents per share, beating the average analyst estimate of 40 cents per share, according to Thomson Reuters I/B/E/S.

 

Morgan Stanley's shares were up 3.5 percent at $29.96 in trading before the bell.

Overall revenue rose to $7.93 billion, from $5.28 billion in the same quarter last year, driven by equities trading and the company's fast-growing wealth management business.

Adjusted revenue from equities trading rose 31 percent to $1.7 billion, while revenue from fixed income, currency and commodities (FICC) trading fell 44 percent to $835 million.

"Our strategy to combine a world class investment bank with the stability of the largest U.S. wealth management franchise and strong investment management is enabling us to deliver exceptional advice and execution for our clients as well as stronger returns for our shareholders," Chairman and Chief Executive James Gorman said in a statement on Friday.

Morgan Stanley has had difficulty with fixed-income trading for years, but the issues that affected the business in the latest quarter also shook most of its competitors.

Trading activity in the bond market slowed markedly during the period amid expectations the Federal Reserve would soon start to wind down its stimulative bond-buying program.

Goldman Sachs Group Inc reported on Thursday that its revenue from FICC trading fell 44 percent in the quarter. Citigroup Inc's fell 26 percent, Bank of America Corp's 20 percent and JPMorgan Chase & Co's 8 percent.

Revenue in Morgan Stanley's wealth management business increased 8 percent to $3.48 billion, while the business's pretax profit margin edged up to 19 percent, getting closer to Gorman's target of a minimum 20 percent.

Morgan Stanley completed its acquisition of brokerage Smith Barney from Citigroup in June. It now collects all of the earnings from the former joint venture but must wait until 2015 to accrue all of Smith Barney's client deposits.

(Reporting by Lauren Tara LaCapra in New York and Tanya Agrawal in Bangalore; Editing by Ted Kerr)