Morgan Stanley (MS), the fifth major US bank to report earnings this third-quarter season, reported better-than-expected 3Q’09 profit Wednesday, ending a string of three consecutive losing quarters.
The New York-based firm said it earned $757 million, or 38 cents per share from $7.7 billion, or $6.97, a year earlier, topping analysts’ estimates of 27 cents per share.
The firm reported consolidated net revenues of $8.7 billion from $18 billion a year earlier — also ahead of the $7 billion in revenue analysts had expected. The bank said revenue in the most recent quarter was lower in part because a continued improvement in debt-related credit spreads that reduced sales and trading revenue.
Morgan’s core business in asset management was profitable for the third consecutive quarter, offsetting $400 million in real estate investment losses and red ink in Merchant Banking business. Net merchant revenues were $98 million, compared with $141 million in last year’s third quarter. The firm attributed the decrease primarily to lower operating revenues associated with the Crescent real estate subsidiary. Meanwhile, net revenues in the core business were $600 million, up from $308 million in the prior year.
“Morgan Stanley continued to build momentum across our business this quarter, as we made important progress in executing key strategic initiatives,” CEO John Mack said in a statement, pointing to strong results in M&A and underwriting debt and equity. Underwriting revenue of $760 million was up 74 percent from the quarter a year ago helped by improved market activity. “I am confident that we are well positioned to serve our clients and realize new opportunities as markets continue to recover.”
“We still have work to do in sales and trading,” he said.
Morgan said also that its revenues at the institutional securities business plunged 69% to $5 billion. But at the global wealth management unit the firm nearly doubled its results, raking in $3 billion, up 91% from a year ago reflecting higher net revenues related to MSSB.
With Morgan Stanley, “you’re seeing a tremendous turnaround,” Rochdale Securities analyst Dick Bove told CNBC this morning.
Shares of MS are up $2.02, or 6.12%, to $34.56 in NYSE trading.