The investment bank's quarterly profit soared 57 percent and breezed past estimates, spurred by fixed income trading revenue that more than doubled. Fred Katayama reports.
The strong trading rebound reported by the big banks now includes Morgan Stanley. Its fixed income revenue more than doubled in the latest quarter, driving up the investment bank's profit 57 percent. The volatility spurred by Britain's vote to leave the European Union and concerns about shifts in monetary policy boosted bond trading. KBW analyst Brian Kleinhanzl said, "Results this quarter were driven by strong trading results. The quarter was a big beat on trading but that was largely expected given results of other banks thus far." Revenue also grew at its wealth management unit that now accounts for more than 40 percent of its total. Morgan Stanley has been diving deeper into this area to shield it from the volatility of its trading business. One gauge of profitability - return on equity - rose to 8.7 percent - still shy of CEO Jim Gorman's target of 9 to 11 percent by the end of 2017 and short of rival Goldman's 11.2 percent. Morgan Stanley shares, which have outperformed their peers this year, rose at the start of trading.