Morgan Stanley beats quarterly profit estimates on equity trading strength — SkimNews
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- Morgan Stanley posted Q3 profit of $4.91B ($3.03/share), beating the $2.91 EPS consensus estimate on net revenue of $20.34B; equity trading revenue jumped ~41% YoY to $5.8B, which AJ Bell's Daniel Coatsworth said did 'the heavy lifting' for the quarter.
- Fixed-income trading fell 7.3% YoY to $2.01B, mirroring Goldman Sachs's weakness, with CFO Sharon Yeshaya attributing the decline to a 'sharp and in some instances unexpected' rise in interest rates that widened spreads and squeezed bond-portfolio holders.
- Investment banking revenue rose 2% YoY to $2.16B, anchored by Morgan Stanley's lead-adviser roles on Uber's $14.8B Delivery Hero deal and GE Aerospace's $11.75B acquisition of Consolidated Precision Products — even as LSEG data showed global deal value plunging 41% QoQ to $993B, the first sub-$1T quarter since Q2 2025.
- IPO pipeline activity includes underwriting roles in the expected Anthropic and OpenAI listings; Yeshaya said many Q3 cancellations had been in discussion before the rate spike and that management teams need to 'get comfortable with the valuations' before deals return.
- Wealth management booked record net new assets of $232B in Q3, with over half tied to IPO-related flows from the June SpaceX listing as large pre-IPO stakeholders converted private stakes into Morgan Stanley-advised accounts; the unit's net revenue rose 10.1% YoY to $9.07B.
- Private credit withdrawal requests at the North Haven Private Income Fund held at 11.4% in the latest tender offer, nearly matching the prior quarter's 11.6% and bucking an industry trend of easing redemptions — with the source attributing sector pressure partly to AI-disruption fears in software holdings.
- Morgan Stanley shares were down 2.5% premarket despite the beat, leaving the stock up about 5.1% year-to-date in 2026 — outperforming peer Goldman Sachs but lagging broader markets, after a sharp Q3 selloff in US bank stocks on multi-decade-high Treasury yields.
Why it matters: The 41% equities trading windfall masks a more telling picture: fixed-income revenue dropped 7.3%, global M&A collapsed 41% QoQ to a five-quarter low, and private credit redemptions held near 11.4% — suggesting this 'trading-heavy' quarter is partly defensive, with dealmaking normalization and credit-fund stress the unresolved drags on the bank's franchise.
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