finance

Morgan Stanley tops analysts' revenue estimates by $1 billion on stronger-than-expected trading


James Gorman, chairman and chief executive officer of Morgan Stanley, speaks during a Bloomberg Television interview in Beijing, China, on Thursday, May 30, 2019.

Giulia Marchi | Bloomberg | Getty Images

Morgan Stanley posted third quarter profit of $2.7 billion, or $1.66 per share, exceeding the $1.28 estimate of analysts surveyed by Refinitiv. The firm generated revenue of $11.7 billion, 16% higher than a year earlier and a billion dollars more than the estimate.

Under Chief Executive Officer James Gorman, Morgan Stanley has emphasized its wealth management division, a far steadier business than its trading operations. Wealth management benefits from rising markets as fees typically climb along with assets under management.

In fact, Gorman has doubled down on his push to diversify away from Morgan Stanley’s traditional strengths of trading and investment banking.

Last week he announced that his bank is acquiring Eaton Vance for $7 billion, adding heft and scale to the smallest of the bank’s three main businesses, investment management. In February, he announced the $13 billion takeover of discount brokerage E-Trade.

Analysts also have high expectations for the firm’s trading operations after JPMorgan Chase and Goldman Sachs both beat estimates on better-than-expected markets revenue.

Morgan Stanley is the last of the six biggest U.S. banks to report third quarter earnings. JPMorgan, Goldman Sachs and Citigroup beats analysts’ profit expectations as they set aside smaller loan-loss provisions. Bank of America and Wells Fargo disappointed as the firms struggled with the impact of lower interest rates.

Shares of Morgan Stanley are almost unchanged this year through Wednesday, outperforming the 31% decline of the KBW Bank Index.

Here’s what Wall Street expected:

Earnings: $1.28 a share, less than 1% higher than a year earlier, according to Refinitiv.

Revenue: $10.64 billion, 6% higher than a year earlier

Wealth management: $4.45 billion, according to FactSet

Trading: Equities $2.19 billion, Fixed Income $1.59 billion

This story is developing. Please check back for updates.



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