US Morgan Stanley jumps after Q3 earnings boosted by fixed income and investment management

For the three months ending on 30 September, the banking heavyweight posted a 2.0% in earnings to reach $2.06bn for adjusted and diluted earnings per share of $1.21 (consensus: $1.11).

In the year ago period, Morgan Stanley recorded an EPS of $1.17.

The bank's top line only grew by roughly 1.0% to reach $10.032bn, but that was better than a 3% drop to $9.6bn anticipated on the street.

"We delivered strong quarterly earnings despite the typical summer slowdown and volatile markets [...] Our consistent performance shows the stability of our business model. We remain committed to controlling our expenses and are well positioned to pursue our growth initiatives," said Morgan Stanley chief executive officer James P. Morgan.

Within the Institutional Securities unit, net revenues were up by 1.9% to $5.02bn, with revenues in the investment banking arm up 5.2% to $1.54bn, helped by a 15.2% surge in revenues from fixed income underwriting to $584m.

But the best performance was seen in its Sales and Trading unit, where revenues were up by 10.0% to $3.455bn as revenues from fixed income trading jumped by 21% to $1.43bn.

However, revenues from Investments and Other declined from $340.0m to just $33.0m, partly offsetting growth in the investment bank's other two units.

Revenues also declined in Wealth Management, falling by 9.3% to $4.36bn, although in Investment Management they grew 17% to $764.0m.

Meanwhile, the bank's expense efficiency ratio deteriorated from 71.0% to 73.0%.

The lender's return on equity slipped from 11.5% in the comparable year ago period to 11.2%, although its book value per share rose from $40.67 to $45.49.

As of 1301 BST, shares of Morgan Stanley were climbing by 3.88% to $44.46.