Morgan Stanley reported a robust 32% profit increase for the third quarter of 2024, surpassing market expectations and driving its shares to their biggest intraday gain in nearly four years. The bank’s strong performance was fueled by a 13% revenue rise in its trading division and a continued rebound in investment banking fees, mirroring a broader uptrend across Wall Street.
Revenue for the quarter totaled $15.4 billion, beating analysts’ estimates of $14.3 billion. The wealth management unit was a standout contributor, generating $7.27 billion in revenue, surpassing forecasts and drawing $64 billion in net new assets. The unit also boosted its pretax margin to 28.3%, driven by the growth of fee-based assets, highlighting the firm’s expanding influence in the wealth management sector.
“It was a standout quarter in a constructive environment,” CFO Sharon Yeshaya said, emphasizing the bank’s momentum in capital markets. “We are only getting started and capital markets are only going to get stronger. It’s good but it’s not the peak,” she added, signaling optimism about the firm’s growth trajectory.
The upbeat results sent Morgan Stanley’s stock surging by as much as 8.2%, its largest intraday gain since November 2020, trading at $120.89—up 7.7%—as of 11:01 a.m., pushing the stock’s year-to-date increase to 30%.
CEO Ted Pick, who has championed the idea of a multiyear upswing in investment banking, highlighted that Morgan Stanley is well-positioned to capitalize on the rebound in fees and dealmaking. The bank, which has its sights set on reaching a $10 trillion asset management target, is also signaling further margin expansion in its wealth business as it scales.
As part of its strategy to seize new opportunities, Morgan Stanley has reshuffled its senior management, naming Mo Assomull as co-head of investment banking alongside Eli Gross and Simon Smith. Evan Damast and Henrik Gobel were also appointed to lead the global capital-markets unit, positioning the bank to maximize gains from a revival in dealmaking activity.
Morgan Stanley’s trading business continued to outperform. The fixed-income division posted $2 billion in revenue, outstripping estimates of $1.85 billion. Meanwhile, the equities division generated $3.05 billion, capitalizing on market trends that have helped banks offset challenges in fixed-income trading. The firm’s equities gains mirror similar surges seen across the industry, with JPMorgan reporting a 27% increase and Goldman Sachs and Bank of America both up by 18%.
“There is an element of the leaders pulling away from the pack because it costs a lot to run those businesses every year,” Pick stated in a Bloomberg Television interview, highlighting the advantage Morgan Stanley has in maintaining its leadership position despite rising competition.
Yeshaya noted that the firm remains committed to investing in its trading operations, particularly in areas such as equity derivatives and technology, which she described as essential for sustaining the bank’s competitive edge. “Derivatives on the equities side is one I would point to. There is also technology. That’s not something where you could stand still,” she remarked.
On the advisory front, Morgan Stanley reported $546 million in fees from deals, exceeding estimates of $525 million, while equity underwriting revenue reached $362 million. The rise in public listings and secondary offerings is fueling speculation that these markets will fully recover, presenting further upside for the bank.
Morgan Stanley now manages $7.6 trillion in assets across its investment management and wealth units. The bank’s shares had lagged earlier this year as investors were cautious about its ability to meet margin targets amid expectations of rate cuts. However, the firm’s recent results have defied these cautious forecasts, showcasing its resilience.
Reflecting on the bank’s outlook, Yeshaya said, “The discussion where we were at the beginning of the year — we weren’t sure what would happen.” She emphasized the strength of the firm’s ability to attract fee-based assets, noting that these have a far more substantial impact than net interest income fluctuations.
“Our value proposition is in the firm’s wealth-advisory business,” Yeshaya added. “We have shown durable, sustainable growth, and the opportunities ahead of us are extremely strong.”
Key Highlights:
- Total Revenue: $15.4 billion, surpassing estimates of $14.3 billion.
- Wealth Management Margin: Achieved a pretax margin of 28.3%.
- Earnings per Share: $1.88, in line with robust performance expectations.
With a strong quarter behind it, Morgan Stanley appears poised to continue its momentum as the capital markets environment improves, aiming to maintain its edge in wealth management and trading as market conditions evolve.
