Morgan Stanley profit up thanks to equity trading

Morgan Stanley reported a better-than-expected quarterly profit on Tuesday, driven by higher revenue in its stock trading and equity underwriting businesses.

Equity trading revenue rose 7% in a quarter marked by uncertainties in global financial markets stemming from an ongoing tariff war between the United States and China.

Morgan Stanley’s bond trading revenue rose 1%, outperforming traditional competitor Goldman Sachs Group Inc, which reported a 10% fall in revenue at the business.

Bond trading at Wall Street’s top bank – JPMorgan – declined 10% in the third-quarter.

Morgan Stanley’s overall revenue rose a better-than-expected 7.3%, also helped by a 62% jump in equity underwriting revenue.

Chief Executive Officer James Gorman has restored Morgan Stanley to health since taking over in 2010, when the bank was still reeling from the financial crisis.

His tenure has been defined by reducing risk, exiting problematic businesses and focusing on steadier ones that can generate reliable revenue.

However, some analysts now question the bank’s future growth strategy. Its shares have fallen 17% this year, underperforming the S&P Financial index, with lackluster trading also weighing on the stock. The shares were up 2.4% before the opening bell.

The bank’s sales and trading revenue, its biggest contributor to total revenue, rose 7.5% and came in better than that of JPMorgan Chase & Co. and Citigroup Inc.

Net income attributable to Morgan Stanley rose to $2.11 billion, or $1.17 per share, in the third quarter ended September 30, from $1.78 billion, or 93 cents per share, a year ago. (Reuters)