Skip to main content

Globe Investor Morgan Stanley beats forecasts, bond trading results rise

A man walks into the Morgan Stanley offices in New York January 18, 2012.

SHANNON STAPLETON/REUTERS

Morgan Stanley on Thursday reported better-than-expected adjusted earnings for the third quarter as it boosted revenue from trading bonds, long a sore spot for the investment bank.

Income from continuing operations totaled $561-million (U.S.), or 28 cents per share, compared with $64-million, or 2 cents per share, a year earlier.

On that basis, analysts had been expecting 24 cents per share, according to Thomson Reuters I/B/E/S. Morgan Stanley shares rose nearly 2 per cent in premarket trading after the results were reported.

Story continues below advertisement

The main driver of the higher adjusted earnings were improvements in its institutional securities business, which includes trading and investment banking.

Pretax income in that business, excluding debt valuation adjustments, was $345-million, compared with $37-million a year ago.

Morgan Stanley's global wealth management business also showed improvement, excluding one-time integration costs and buying an additional stake in a retail brokerage joint venture with Citigroup Inc. The adjusted pretax profit margin for the business rose to 13 per cent from 11 per cent. Management has targeted a pretax margin in the "mid-teens" for wealth management by next year.

Overall, Morgan Stanley lost money in the third quarter due to a $2.3-billion accounting charge to reflect an increase in the value of the bank's debt.

Including that charge, Morgan Stanley lost $1-billion, or 55 cents per share, in the quarter.

U.S. accounting rule makers are changing the rule that requires earnings to reflect changes in a bank's debt values. Analysts and investors tend to ignore income and losses from debt value adjustments because the adjustments swing wildly but have little impact on a bank's daily business.

Report an error
Tickers mentioned in this story
Unchecking box will stop auto data updates
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed.

Read our community guidelines here

Discussion loading ...

Cannabis pro newsletter