A surge in investment banking at Morgan Stanley (MS) has fueled a deal-making revival on Wall Street, as the company’s third-quarter earnings beat analysts’ expectations.
Investment banking fees jumped 56% from a year ago, the largest jump among major banks, to nearly $1.4 billion.
A rebound in investment banking and increased trading helped Morgan Stanley raise its net profit by 32% from the previous year, to $3.2 billion.
The results underpin a broad recovery across the Wall Street operations of the nation’s largest banks. Investment banking fees and stock trading revenue also jumped at JPMorgan Chase (JPM), Wells Fargo (WFC), Goldman Sachs (GS), Bank of America (BAC), and Citigroup (C).
Executives at these banks were optimistic that the start of the Fed’s rate-cutting cycle — which last month cut its benchmark interest rate by 50 basis points — would mean more deals in the near future.
“The firm reported a strong third quarter in a constructive environment across our global footprint,” Ted Beck, CEO of Morgan Stanley, said in a statement, citing “momentum in markets and underwriters on strong client engagement.”
Morgan Stanley beat analysts’ expectations in deal-making fees from its bond underwriting and mergers and acquisitions advisory unit as well as revenue from its trading and wealth management divisions.
Its total net revenue of $15.4 billion increased 16%. Fixed income and equity trading revenues rose 13% to $5 billion, driven largely by equities.
The stock rose more than 3% in early morning trading. Early Wednesday, it was up more than 20% since the start of January, lagging the gains of some other big-bank rivals.
One area of the firm’s investment banking franchise that has proven more resilient than analysts had hoped is its equity capital markets desk, which generated revenue of $362 million. Analysts were hoping for another $12 million.
Another bright spot on Tuesday was Morgan Stanley’s recent performance in wealth management, which provides financial advice to high-net-worth individuals.
Net new assets in this division were up 79% from last year and 76% from last quarter, to $64 billion. Revenue was $7.3 billion, up 13.5% from last year and up 7% from last quarter.
The third-quarter performance bodes well for Beck, who is still in his first year as president.
Since the announcement that Beck would take over from longtime CEO James Gorman, the company’s shares have outperformed major stock indexes. Up to 57% for that period. Gorman intends to step down as executive chairman at the end of this year.
“Our management continues to focus on driving sustainable growth and delivering long-term returns for our shareholders,” Beck added in the statement.
David Hollerith is a senior reporter at Yahoo Finance covering banking, cryptocurrency, and other areas of finance.
Click here for in-depth analysis of the latest stock market news and events that move stock prices.
Read the latest financial and business news from Yahoo Finance
“Devoted student. Bacon advocate. Beer scholar. Troublemaker. Falls down a lot. Typical coffee enthusiast.”