Morgan Stanley (MS) said third-quarter profit rose 19% from a year earlier as revenue from trading stocks and bonds increased while President Donald Trump's tax cuts fattened the bottom line.
Net income applicable to Morgan Stanley rose to $2.11 billion, the New York-based company said Tuesday, Oct. 16. Earnings per share were $1.17, beating the average analyst estimate of $1.01 in a FactSet survey.
Like rival U.S. banks, Morgan Stanley is getting a windfall from the Trump tax cuts. Although the tax cuts, which took effect last December, have drastically widened the U.S. government's budget deficit, ballooning the national debt past $21.5 trillion, the legislation has enriched banks' shareholders and employees.
Morgan Stanley CEO James Gorman has led a turnaround at Morgan Stanley after signs in recent years of deterioration in its bond, commodities and currency trading unit. Ted Pick, a lieutenant who led Morgan Stanley's stock-trading unit to the top rank in the industry, stabilized the bond unit and was rewarded earlier this year with a promotion to run the entire investment-banking and trading operation.
Combined revenue from trading stocks and bonds rose by 4.6% to $3.2 billion, in a period that saw mixed results at rival firms such as Goldman Sachs Group Inc. (GS)
Stock-trading revenue at Morgan Stanley rose 7% to $2.02 billion, while fixed-income trading revenue rose by 1% to $1.18 billion.
"In trading, Morgan Stanley was able to avoid any pitfalls, eking out modest growth for equities and fixed income," Octavio Marenzi, CEO of capital-markets management consultancy Opimas, said in an e-mailed statement.
Goldman Sachs on Tuesday said total trading revenue slipped by 0.6% to $3.1 billion.