The US investment bank Morgan Stanley has returned to the black with quarterly profits of $757m, in the latest sign of a revival in the financial health of Wall Street's top financial institutions.
Morgan Stanley's profits for the three months to September contrasted with a loss of $159m (around £96m) for the preceding quarter, with the improvement aided by a 74% year-on-year surge in revenue from underwriting mergers, acquisitions and corporate share offerings.
But the company's trading floor, which tends to adopt a relatively conservative approach to risk in comparison to rivals such as Goldman Sachs and JP Morgan, produced a loss of $600m on trading in fixed income instruments, and a $200m loss on equity dealing.
Morgan Stanley's chief executive, John Mack, said the bank "continued to build momentum" in executing "key strategic initiatives".
He noted improvements in the performance of fixed income sales and trading, commodities, prime brokerage and wealth management, but said: "Although we still have work to do in sales and trading, it offers our single biggest opportunity for growth as build out our client flow business and pursue disciplined risk-taking."
Morgan Stanley's performance follows in the footsteps of strong earnings from Goldman and JP Morgan, although US banks with a big high street presence, such as Citigroup and Bank of America, have had a tougher time as they contend with ballooning defaults on credit cards and consumer loans.
The numbers sent Morgan Stanley's shares up by 1% in pre-market trading before the opening of the New York Stock Exchange. The figures represented a sharp improvement from Morgan Stanley's position at the height of the financial crisis in September and October last year, when the firm faced a crisis in investor confidence and doubts about its future.
"What you're seeing is a tremendous turnaround of a company that had been in a great deal of trouble," said Richard Bove, a banking analyst at Rochdale Securities.
Morgan Stanley said its remuneration expenses were $5bn, compared to $5.1bn a year ago, which amounts to a little over $100,000 for each of its 45,000 employees.
