Morgan Stanley profit jumps on bond-trading comeback

Wed Oct 19, 2016 12:33pm EDT
 
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By Olivia Oran and Sweta Singh

(Reuters) - Morgan Stanley reported a better-than-expected profit on Wednesday, boosted by a surge in bond trading that helped all Wall Street banks last quarter.

Morgan Stanley's gains were especially notable. Its adjusted bond-trading revenue more than doubled, hitting Chief Executive James Gorman's revenue target for that business for the second quarter in a row.

The bank had struggled for years to improve in bond trading, which has volatile revenue and tough capital requirements to meet. Earlier this year, Morgan Stanley restructured the unit, cutting 25 percent of staff and appointing new leadership.

In an interview, Chief Financial Officer Jonathan Pruzan said the bank was on the right track, though it might be too soon to claim victory.

"The success we've had in the last quarter or two has boosted morale and confidence of the team," he said. "But these things take time and until we can do it for years as opposed to quarters, we're not going to declare success."

Though it is still early in the fourth quarter, Pruzan said the trading environment has so far been similar to the end of September.

Overall, Morgan Stanley's earnings applicable to common shareholders rose 62 percent to $1.5 billion, from $939 million in the same quarter a year earlier. Earnings per share rose to 81 cents from 48 cents, helped by stock buybacks.

Analysts had estimated earnings of 63 cents per share, according to Thomson Reuters I/B/E/S.   Continued...

 
The logo of Morgan Stanley is seen at an office building in Zurich, Switzerland September 22, 2016.  REUTERS/Arnd Wiegmann/File Photo