By Pritam Biswas and Tatiana Bautzer
Oct 14 (Reuters) – Morgan Stanley beat third-quarter profit estimates on Wednesday, as market volatility due to the interest-rate decision and the US-Iran war boosted equity trading, while advisory roles and M&A fees lifted investment banking income.
The market turbulence led investors to realign their portfolios, driving up trading volumes and boosting revenue at the bank’s trading desks. Morgan Stanley posted equity trading revenue of $5.8 billion, a nearly 41% rise from a year ago.
Goldman Sachs, which beat estimates for third-quarter profit a day ago, also reported a similar jump in equities trading.
“The company’s equities trading activity has done a lot of the heavy lifting for the bank’s third quarter overall,” said Daniel Coatsworth, head of markets at AJ Bell.
Morgan Stanley’s revenue from its fixed income trading dropped 7.3% to $2.01 billion. The slowdown also mirrored that of Goldman Sachs whose fixed income, currency and commodities revenue came in 1% down from a year ago.
Profit attributable to Morgan Stanley came in at $4.91 billion, or $3.03 per share, in the three months ended September 30, compared with $4.61 billion, or $2.80 per share, a year ago.
Analysts were expecting a profit of $2.91 per share, according to estimates compiled by LSEG.
INVESTMENT BANKING HOLDS
Global deal value plunged 41% from the prior quarter to a total of $993 billion, LSEG data showed, dipping below the $1 trillion quarterly threshold for the first time since the second quarter of 2025.
The IPO market also remained subdued as several companies pulled their offerings citing tough market conditions.
Morgan Stanley’s investment banking revenue rose 2% to $2.16 billion from a year ago. Goldman Sachs also reported higher income from its investment banking division whereas JPMorgan Chase reported a slowdown.
Morgan Stanley was the lead financial advisor to Uber’s deal to buy Germany’s Delivery Hero at an equity value of $14.8 billion.
The bank was also the lead financial advisor to castings supplier Consolidated Precision Products in its deal to be acquired by GE Aerospace for $11.75 billion.
The investment bank has also secured underwriting roles in the expected IPOs of artificial intelligence companies Anthropic and OpenAI.
US bank stocks fell sharply in the third quarter as a surge in Treasury yields to multi-decade highs triggered investor fears over rising funding costs and a prolonged slowdown in mergers and acquisitions.
Shares of Morgan Stanley have gained about 5.1% in 2026, underperforming the broader markets, but outperforming peer Goldman Sachs. The stock was trading marginally lower before the bell.
PRIVATE CREDIT COOLS
Investor withdrawal requests at Morgan Stanley’s North Haven Private Income Fund remained high in the third quarter, bucking a broader industry trend of slowing redemptions.
Investors sought to cash out 11.4% of shares in the private credit fund’s latest tender offer, nearly matching the 11.6% requested in the prior quarter.
The private credit sector has faced redemption pressure over investor fears that AI could disrupt software companies within their portfolios.
However, overall withdrawal requests at major funds eased in the third quarter as asset managers cleared existing backlogs and investor sentiment recovered.
Morgan Stanley’s investment management arm, which houses the private credit funds, reported net revenue of $1.46 billion in the three months ended in September, down from $1.65 billion a year ago.
Meanwhile, net revenue at its wealth management arm, which reached a longtime goal of $10 trillion in assets in the second quarter of 2026, stood at $9.07 billion, up 10.1% from a year ago.
“Some might be disappointed with the wealth management revenue. That came in a touch below forecasts and is significant because wealth management is one of the bank’s key strategic growth engines,” Coatsworth said.
Goldman Sachs and Morgan Stanley have expanded their wealth management businesses in recent years to generate steadier earnings and reduce reliance on their volatile trading and investment banking units.
Record net new assets were $232 billion, with just over half associated with IPO-related flows, the bank said.
Net revenue at the bank came in at $20.34 billion, up from $18.22 billion a year ago and compared to expectations of $19.95 billion.
(Reporting by Pritam Biswas in Bengaluru and Saeed Azhar in New York; Editing by Arun Koyyur)
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