Morgan Stanley earns $4.9 billion on stock trading and wealth

What happened

Morgan Stanley reported net income of $4.9 billion for the third quarter on Wednesday 14 October, completing the results of six big U.S. banks that began reporting a day earlier. ^{[1, 2, 3, 4, 5, 6]}

Its net revenues were $20.3 billion, against $18.2 billion a year earlier, when net income was $4.6 billion. Its return on tangible common equity, a yearly rate of profit on shareholders' capital less goodwill and intangibles, was 22.6 percent, against 23.5 percent. ^[1]

Why it matters

All six banks took in more revenue than a year earlier, from 2 percent more at Wells Fargo to 23 percent more at Goldman Sachs. Five earned more; Bank of America earned $6.9 billion, against $8.3 billion, after a $1.2 billion regulatory settlement charge. Stock trading revenue was higher at all six, from 11 percent at Bank of America to 72 percent at Goldman; bond, currency and commodity trading was lower at four, flat at Goldman. ^{[1, 2, 3, 4, 5, 6]}

Inside Morgan Stanley

Institutional Securities, Morgan Stanley's trading and investment banking arm, had net revenues of $10.0 billion, against $8.5 billion. Equity revenues were $5.8 billion, 41 percent higher, on client engagement and strength in Asia; fixed income was 7 percent lower, at $2.0 billion. ^[1]

Wealth Management had record net revenues of $9.1 billion, against $8.2 billion, and a record $232 billion of net new assets, just over half tied to initial public offerings. Investment Management's net revenues were $1.5 billion, against $1.7 billion, after a reversal of carried interest, a manager's share of fund profits, mostly at one private fund. Clients put $15.8 billion more into its long-term funds than they took out. ^[1]

Chief executive Ted Pick told CNBC: 'The interaction of the AI phenomenon and geopolitics has been the dominant reality the whole year.' He said concerns about overseas conflict, inflation and surging yields slowed activity across Wall Street from early September, CNBC reported. He added that he is 'cautiously optimistic' about markets in the fourth quarter. ^[7]

Goldman Sachs and Wells Fargo

Goldman Sachs's equities revenues were $6.44 billion, 72 percent higher, on financing and derivatives for clients; its net revenues were $18.68 billion and its annualized return on equity 18.7 percent. Wells Fargo earned $5.95 billion on revenue of $21.87 billion, against $21.44 billion. Its equities revenue grew 21 percent while total markets revenue was 1 percent lower. ^{[2, 3]}

What settles it next

Wells Fargo calls its figures preliminary until its quarterly report on Form 10-Q, and Morgan Stanley's capital ratios are estimates until its own. SEC rules give larger companies 40 days after a quarter ends to file that report: Monday 9 November, by the desk's count. ^{[3, 1, 8]}

Who it reaches

Morgan Stanley (MS), Goldman Sachs (GS) and Wells Fargo (WFC) are direct: the figures are each bank's own, from its release filed with the SEC on Tuesday 13 or Wednesday 14 October. ^{[1, 2, 3]}

JPMorgan Chase (JPM), Citigroup (C) and Bank of America (BAC) are adjacent: their own releases, the subject of the series' earlier chapters, supply the comparison of the six. ^{[4, 5, 6]}