Morgan Stanley (MS.N) has posted an 87 percent increase in third quarter earnings as its banking units have enjoyed increased client activity and a profitable equity market.
The bank reported income from continuing operations of $1.7 billion ($0.84 per share), up from income of $889 million ($0.44 per share) for the same period a year ago. It had net revenues of $8.9 billion for the third quarter ended September 30, 2014 compared with $8.0 billion a year ago.
The current quarter included a net discrete tax benefit of $237 million or $0.12 per diluted share.
Morgan Stanley shares increased by 2.7 percent, up to $33.40, in early morning trading on Friday as its third quarter results were well ahead of Wall Street predictions.
Morgan Stanley was involved in the record breaking $25 billion initial public offering of Alibaba Group (BABA.N). The bank has been the largest IPO underwriter worldwide in the first nine months of 2014, with its underwriting revenue almost doubling to $464 million.
Institutional securities revenue (includes trading and investment banking) also did well, with revenue increasing by 22 percent up to $4.52 billion. Bond trading revenue also jumped, by 19.4 percent, up to $997 million – if you exclude accounting adjustments. However, Morgan Stanley (along with many other major banks) has been cutting back in its bond market operations.
Investment Management reported net revenues of $655 million with assets under management or supervision of $398 billion.
James P. Gorman, Chairman and Chief Executive Officer, said in a statement, “Morgan Stanley has delivered another quarter of earnings growth and strong performance based on consistent execution for our clients. We are well positioned to create superior returns for our shareholders, particularly as the U.S. economy continues to strengthen.”