Morgan Stanley, Bank of America, top Q3 estimates
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The news: Wall Street banks Morgan Stanley and Bank of America (BofA) both beat third-quarter estimates as investment banking activity and trading surged in the wake of US President Donald Trump’s trade tariffs.
The numbers: Morgan Stanley’s stock trading revenue soared 35% to USD4.12 billion ($6.33 billion) in the third quarter, surpassing analyst estimates of a 6.6% increase and beating rival Goldman Sachs’ USD3.74 billion in the quarter. Fixed-income traders at the bank brought in 8% more than the year prior, reaching a total trading haul of USD6.29 billion – above the USD5.5 billion anticipated by analysts.
Morgan Stanley’s investment banking fees also climbed 44%, while its wealth businesses surpassed revenue estimates to haul in USD81 billion in new assets and notching a pretax profit margin of 30%.
Morgan Stanley’s net income for the three months to the end of September was USD4.6 billion, more than USD1 billion better than analysts had expected.
BofA’s Q3 earnings saw investment banking revenue rise 43% to USD2.05 billion, ahead of the USD1.65 billion forecast by analysts. M&A advisory fees soared 51% to USD583 million, and revenue from equity and debt issuance increased 34% and 42%, respectively. Net interest income, a key source of revenue for the company, climbed 9.1% to USD15.2 billion, where analysts had expected a 7.6% increase.
BofA’s net income for Q3 climbed 23% to USD8.47 billion.
The context: The consistently strong results across leading US banks during the third quarter comes as trade uncertainty which had been smothering dealmaking activity earlier in the year began to ease, seeing a wave of stalled takeovers seize the opportunity to execute. Traders were also quick to capitalise on the tariff-induced uncertainty that kept markets on edge throughout the period.
Morgan Stanley also secured a lower capital requirement from the US Federal Reserve in September, after the bank asked the Fed to reconsider its assessment.
The sources: Bank of America earnings, Morgan Stanley earnings
