Morgan Stanley 3Q profit rises 25%, helped by trading

CHARLOTTE, North Carolina (AP) — Morgan Stanley said Thursday that profit rose 25% in the third quarter from last year, as the investment bank benefitted from a boost in trading revenue as well as higher investment banking fees.

The New York-based firm posted a profit in the third quarter of $2.72 billion, or $1.66 per share, up from $2.2 billion, or $1.27 per share, in the same period a year earlier. The results beat analysts’ expectations. The results included a one-time tax benefit of $113 million.

Like other investment banks, Morgan Stanley benefitted from markets that generally moved higher through the summer. Morgan Stanley's stock trading division — the firm’s specialty — saw next revenues increase to $2.26 billion from $1.99 billion a year earlier. The bond trading division, smaller than the stock trading operation, saw a bigger jump in revenues in the quarter to $1.92 billion.

Investment banking fees increased modestly. While the fees Morgan Stanley earned from advising companies to do deals declined, fees from underwriting stock offerings more than doubled over the summer.

The firm reported a return on tangible common equity — a measurement of profitability of investment banks that gauges how much they earn on the assets the bank holds — was 15% in the quarter. Typically banks like Morgan Stanley aim for a return on equity above 10%.