Shares in the US group closed up 6.5 per cent yesterday after a stronger set of results across the board, with wealth management posting higher revenues.

Morgan Stanley said yesterday that revenues in the third quarter of 2024 rose 14 per cent to $7.3 billion from $6.4 billion a year ago. The figure was boosted by the positive effect of deferred compensation plans, the Wall Street firm said.

Record pre-tax income of $2.1 billion in the quarter resulted in a pre-tax margin of 28.3 per cent. 

Asset management revenues ($4.266 billion) rose from a year ago on higher asset levels and the cumulative impact of positive fee-based flows. 

Transactional revenues ($1.076 billion) rose by 10 per cent, excluding the impact of mark-to-market on investments associated with deferred compensation plans. The rise in transactional revenues was buoyed by higher levels of client activity across products, particularly in Morgan Stanley’s advisor-led channel.

Net interest income fell from a year earlier. The main factor was lower average sweep deposits partially offset by higher yields on the investment portfolio and lending growth. (A sweep account is a bank or brokerage account that automatically transfers amounts that exceed a certain level into a higher interest-earning investment option at the close of each business day. Commonly, the excess cash is swept into a money market fund.)

Total expenses rose to $5.199 billion from $4.654 billion; provision for credit losses narrowed to $11 million from $41 million. 

Group results
At the group level, Morgan Stanley said net income was $3.2 billion, up from $2.4 billion.

“The firm reported a strong third quarter in a constructive environment across our global footprint. Total client assets have surpassed $7.5 trillion across wealth and investment management supported by buoyant equity markets and net asset inflows. Our business model is delivering strong returns while accreting capital, producing an ROTCE [Return on Average Tangible Common Shareholders' Equity] of 18.2 per cent through the first three quarters of 2024,” Ted Pick, CEO, said.

Net revenue rose to $15.383 billion from $13.273 billion; provision for credit losses dropped to $79 million from $134 million; compensation expenses rose to $6.733 billion from $5.935 billion. 

At the end of September, Morgan Stanley had a Common Equity Tier 1 ratio – a standard international yardstick of a bank’s shock absorber capital – of 15.1 per cent. The bank’s cost/efficiency ratio was 72 per cent for the quarter and the year so far.

Shares in the US firm closed up 6.5 per cent yesterday. Quarterly results reportedly beat estimates.