Breaking News
Investing Pro 0
🚨 Our Pro Data Reveals the True Winner of Earnings Season Access Data

Morgan Stanley executives offer cautious outlook after profit beat

Stock Markets Oct 17, 2019 12:58PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
 
C
-1.49%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
BAC
+0.83%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
GS
+0.13%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
JPM
+1.55%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
WFC
+0.74%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
MS
+0.22%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 

By Anirban Sen and Elizabeth Dilts Marshall

(Reuters) - Morgan Stanley (N:MS) reported a higher-than-expected profit on Thursday, bolstered by strength in bond trading and M&A advisory, but executives were careful not to sound too optimistic about the rest of the year.

Like other big banks, Morgan Stanley had to navigate falling interest rates, volatile markets and recession signals during the third quarter, and fared relatively well. Its overall profit rose 3%, topping Wall Street expectations by a healthy margin.

However, the factors that created such a difficult operating environment during the quarter have not gone away, Chief Executive James Gorman and Chief Financial Officer Jonathan Pruzan said on a call to discuss earnings.

They suggested the trade dispute between the United States and China, further central bank easing, an unknown Brexit outcome and other geopolitical tensions could pressure results further. Although Gorman said the fourth quarter was "off to a good start," that could change.

"We remain cautious today as trade talks swirl and interest rates continue to be debated," Gorman said.

Although Pruzan said CEO confidence has remained high, it is unclear whether companies that are planning initial public offerings will proceed. Morgan Stanley led some of this year's biggest IPOs, but signs of a possible downturn have slowed activity.

"Conversion from pipeline to realized remains highly dependent on market conditions," he said.

During the quarter, Morgan Stanley swallowed heavy losses from stakes in companies that went public. Investment revenue plummeted to $33 million from $340 million.

Nonetheless, Morgan Stanley shares were up 2.7% in afternoon trading, with analysts celebrating the results. The bank beat KBW's revenue forecasts in each business line, analyst Brian Kleinhanzl wrote in a note to clients.

Overall, Morgan Stanley's profit rose to $2.2 billion, or $1.27 per share, from $2.1 billion, or $1.17 per share in the year-ago quarter. Net revenue inched up to $10 billion from $9.9 billion.

Analysts were expecting a profit of $1.11 per share on revenue of $9.6 billion, according to IBES data from Refinitiv.

The sixth-largest U.S. bank capped three days of results from Wall Street heavyweights. JPMorgan Chase & Co (N:JPM), Bank of America Corp (N:BAC) and Citigroup Inc (N:C) also topped expectations, while Goldman Sachs Group Inc (N:GS) and Wells Fargo & Co (N:WFC) disappointed.

Sales and trading revenue rose 10% to $3.5 billion. Gains came from a 21% jump in bond trading as equities trading fell slightly compared to a year ago. Morgan Stanley typically ranks No. 1 in equities trading, but after years of market-share gains it has been facing tougher competition lately.

Its investment banking business, which includes advising on deals and helping corporations raise money, posted a 5% rise in revenue to $1.5 billion.

Wealth management's $4.4 billion in revenue was down 1% from a year ago. That business has been a stabilizing force for Morgan Stanley during volatile times.

The business is trying to add new clients in Asia and lend to them more, Gorman said. Morgan Stanley's loan book grew 8% rise in the third quarter, but net interest income stayed flat due to declining rates.

In investment management, its smallest business, Morgan Stanley reported a 17% rise in revenue, to $764 million.

Gorman complimented Morgan Stanley's trading and investment banking businesses for being resilient in a shaky quarter, and said management is focused on keeping the bank stable and prosperous over the long term.

"There remains tremendous upside here," he said.

Morgan Stanley executives offer cautious outlook after profit beat
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.
  • Any comment you publish, together with your investing.com profile, will be public on investing.com and may be indexed and available through third party search engines, such as Google.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email