Morgan Stanley (NYSE:MS) today reported its financial results for the third quarter of 2020, with the performance of the Institutional Securities segment being particularly robust.
Institutional Securities reported net revenues for the quarter to end-September 2020 of $6.1 billion compared with $5.0 billion a year ago. Pre-tax income was $2.0 billion compared with $1.3 billion a year ago.
Sales and Trading net revenues staged a rise of 20% from a year ago.
- Equity sales and trading net revenues increased from a year ago reflecting strong performance across products on continued client engagement, with notable strength in Asia.
- Fixed Income sales and trading net revenues increased from a year ago on the back of solid performance across businesses and geographies with particular strength in credit products benefitting from an active primary market.
- Other sales and trading net revenues decreased from a year ago due to losses on economic hedges associated with certain of Morgan Stanley’s borrowings and corporate lending activity. This was partially offset by gains on investments associated with certain employee deferred compensation plans (DCP).
Investment Banking revenues rose 11% from a year ago.
- Advisory revenues decreased from a year ago due to lower completed M&A activity and fewer large transactions.
- Equity underwriting revenues increased significantly from a year ago on higher revenues from IPOs, follow-on offerings and blocks as clients continued to access capital markets.
- Fixed income underwriting revenues decreased from a year ago due to declines in loan issuances as large event-driven and M&A financings were muted.
Across all segments, Morgan Stanley reported net revenues of $11.7 billion for the third quarter of 2020 compared with $10.0 billion a year ago. Net income applicable to Morgan Stanley was $2.7 billion, or $1.66 per diluted share, compared with net income of $2.2 billion, or $1.27 per diluted share, for the same period a year ago.
Let’s note that Morgan Stanley recently closed the acquisition of E*Trade. This was noted by James P. Gorman, Chairman and Chief Executive Officer.
Mr Gorman commented:
“We delivered strong quarterly earnings as markets remained active through the summer months, and our balanced business model continued to deliver consistent, high returns. The completion of the E*TRADE acquisition, the subsequent ratings upgrade from Moody’s, and the recently announced acquisition of Eaton Vance significantly strengthen our Firm and position us well for future growth.”