Morgan Stanley Profit Rises, Powered by Deal Making, Trading

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New York Bank says third-quarter profit up 36 percent

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Morgan Stanley benefited from another quarter of merger frenzy. Companies confident in their economic prospects use the summer to acquire rivals or test their luck on the public market.

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Investment banking fees jumped 67% to $2.85 billion, a new quarterly record. Revenue from advising on deals more than tripled to a record $1.27 billion. Fees increased 16% to $1.01 billion from the initial public offering and stock offering arrangements.

The enhanced merger activity from all ends of the bank’s global footprint accelerated the deal, Morgan Stanley Chief Financial Officer Sharon Yeshaya said in an interview. Demand for the deal came from a variety of companies, Ms. Yashaya said.

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“We’re looking broadly, both from a geographic perspective and from a region standpoint, so all healthy signs in terms of what’s happening in that market,” Ms Yashaya said.

Morgan Stanley said the number of deals in the pipeline remains strong, and it expects activity in its investment banking business to continue.

Trading revenue rose 6% to $4.52 billion. JPMorgan Chase & Co. said Wednesday that its third-quarter trading revenue declined 5%.

Revenue in Morgan Stanley’s wealth-management division, which includes E*Trade, rose 28% to $5.94 billion. In the investment-management division, revenue increased 38%.

Shares of Morgan Stanley closed Wednesday at $98.57. They gained a bit in Thursday morning’s trading. Shares of the bank are up 44% this year, reaching an all-time high of $105.45 in August.

Morgan Stanley had 7.4 million retail-business customers, in line with the prior quarter. The average daily number of retail trades handled by the company for the quarter was close to 1 million, but down 8% from the second quarter.

Operating expenses increased 21% to $9.9 billion.

Morgan Stanley increased outstanding borrowings by 19% to $325 billion.

Orla McCaffrey at [email protected]

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