New York: Morgan Stanley reported better-than-expected third-quarter profit on Wednesday, ending a string of three straight losing quarters.
Results were bolstered by strong fixed income sales and trading revenue and improved investment banking underwriting results.
The New York-based firm reported net income for common shareholders of $498 million, or 38 cents a share. Analysts on average had forecast 27 cents a share, according to Thomson Reuters I/B/E/S.
Morgan Stanley shares were up 2% to $33.20 in premarket trading.
The firm reported consolidated net revenues of $8.7 billion in the quarter.
Morgan Stanley has pulled back on risk-taking and taken a more conservative approach, growing its brokerage business since last year’s collapse of the financial sector.
“At least for this quarter, the management strategy and the business model are working and the stock is reflecting that,” said Michael Holland, president of Holland & Co. “You don’t know how well they will be in succeeding in the future with this business model, but for now that is a very good performance in the quarter.”
Earnings in the 2008 third quarter were $7.7 billion, or $7.38 a share, boosted by a one-time accounting gain resulting from declines in the value of certain liabilities in the bank’s portfolio.
The latest results include a loss of $900 million, or 36 cents a share, stemming from improvements in the firm’s debt-related credit spreads. Writing up the firm’s debt caused a loss of $2.3 billion in the second quarter.
Morgan Stanley stashed away about $5 billion for year-end bonuses during the third quarter, lifting its total for the year to $10.9 billion.