Morgan Stanley has regained its position over Goldman Sachs in equities trading during the third quarter, marking the first occurrence since 2022. The investment bank reported a significant profit increase, with net income rising to $4.6 billion for the three months ending in September, surpassing analysts’ expectations by more than $1 billion. This surge in profits reflects the robust performance of core Wall Street activities, including investment banking and trading, which have consistently outperformed forecasts across major banks in the U.S.
In equities trading, Morgan Stanley generated revenues of $4.1 billion, representing a 35% increase compared to the same quarter the previous year. This figure puts it ahead of Goldman Sachs, which reported $3.7 billion in equities trading revenues, emphasizing the competitive rivalry between these two financial giants. The last time Morgan Stanley outperformed Goldman in this area was in the final quarter of 2022, following a period where Morgan Stanley lost its leading position due to significant losses linked to Archegos Capital Management.
With Ted Pick now at the helm as CEO, having taken over from James Gorman at the beginning of 2024, Morgan Stanley is making deliberate efforts to strengthen its business. CFO Sharon Yeshaya emphasized the importance of building a durable operation, highlighting the lending and prime brokerage sectors tied to equities as well as ongoing corporate relationships.
Investment banking has also played a crucial role, bringing in $2.1 billion in revenues—an impressive 44% increase from the same quarter last year. This performance aligns closely with Goldman Sachs, which reported a 43% rise in investment banking revenues to $2.7 billion. Other major banks like JPMorgan Chase and Citigroup recorded smaller gains, with JPMorgan’s investment banking revenues increasing by 16% to $2.6 billion and Citigroup achieving a 17% rise to $1.2 billion.
Additionally, Morgan Stanley’s wealth management division exceeded expectations, attracting net new assets totaling $81 billion—above the anticipated $67 billion. This growth is crucial for investors as it indicates the future trajectory of the business, with revenues divided almost equally between the investment bank and the wealth management segments.
Morgan Stanley’s strong performance coincided with Bank of America’s own impressive results in investment banking, which saw a 43% rise in fees to just over $2 billion, beating analysts’ expectations of $1.6 billion. Bank of America also reported an 11% increase in revenues in its markets division to $6.2 billion, boosting the bank’s total profits nearly 25% from the previous year to $8.5 billion.
Following the announcements, shares of both Morgan Stanley and Bank of America saw an uptick of over 4% in pre-market trading, reflecting positive market sentiment toward their earnings reports.
