Morgan Stanley Q3 Profit Climbs, Results Beat Estimates
NEW YORK CITY (dpa-AFX) - Morgan Stanley (MS) reported a profit for the third-quarter ended September 30, 2016 that grew 62 percent from the previous year, as fixed-income trading revenue almost tripled.
Both earnings per share and revenue for the quarter beat analysts' expectations.
In the pre-market, MS is currently trading at $32.64, up 0.32 or 0.99 percent.
James Gorman, Chairman and Chief Executive Officer, said, "This quarter we saw record revenues in Wealth Management and a strong performance in our Sales and Trading business. While the environment was more challenging for our equity underwriting and asset management businesses, our expense initiatives remain on track. Overall the results reflect steady progress against our long term strategic goals."
Net income applicable to common shareholders for the third-quarter rose 62 percent to $1.52 billion, from last year's $939 million, with earnings per share improving to $0.81 from $0.48 in the previous year.
Earnings per share, excluding DVA, rose to $0.81 from $0.34 in the prior year. Analysts polled by Thomson Reuters expected the company to report earnings of $0.63 per share for the third-quarter. Analysts' estimates typically exclude special items.
Fixed Income sales and trading net revenues was $1.5 billion up from $583 million a year ago driven principally by credit and rates businesses on improved market conditions compared with the prior year period.
Quarterly net revenues grew 15 percent to $8.91 billion from $7.77 billion a year ago. Wall Street expected revenues of $8.17 billion for the third-quarter. The prior year quarter included DVA revenues of $435 million.
Excluding DVA, net revenues were $7.3 billion in the prior year quarter Compensation expense of $4.1 billion increased from $3.4 billion a year ago primarily driven by higher revenues. Non-compensation expenses of $2.4 billion decreased from $2.9 billion a year ago reflecting lower litigation costs and continued execution of the Firm's expense management initiatives.
Institutional Securities reported pre-tax income from continuing operations of $1.4 billion compared with pre-tax income of $688 million a year ago, or $253 million excluding DVA. Net revenues for the current quarter were $4.6 billion compared with $3.9 billion a year ago, or $3.5 billion excluding DVA. The following discussion for sales and trading excludes DVA from the prior year period.
Wealth Management reported pre-tax income from continuing operations of $901 million compared with $824 million in the third quarter of last year. The quarter's pre-tax margin was 23%. Net revenues for the quarter were $3.9 billion compared with $3.6 billion a year ago.
Investment Management reported pre-tax income from continuing operations of $97 million compared with a pre-tax loss of $38 million in the third quarter of last year. Net revenues of $552 million increased from $274 million in the prior year. Results for the prior year quarter included the reversal of previously accrued carried interest associated with the Asia private equity business. Asset management fees were essentially unchanged from a year ago.
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