In the midst of the coronavirus crisis, the American investment bank increased its turnover by 16% (to nearly $ 12 billion) thanks to the good health of its brokerage activities on the financial markets, in the bank of investment, advice on IPOs, wealth management, not to mention asset management (+ 38%) ... What is its secret?
Morgan Stanley saw its profit jump 26% in the third quarter despite the economic crisis hitting the United States, the American investment bank taking advantage of the good health of its brokerage activities on the financial markets.
"Solid quarterly performance"
The establishment earned $ 2.6 billion over the period, details a statement Thursday. Its revenue increased 16% to $ 11.7 billion.
"We had a strong quarterly performance as the markets remained active through the summer months," Company CEO James Gorman said in the statement.
+ 38% in asset management
Revenue from its stock, bond or commodity brokerage business increased 20% from July to September.
Those generated by the investment bank increased by 11%: while the advisory activity for mergers and acquisitions decreased, that for initial public offerings (IPOs) more than doubled, the summer having been marked by the 'arrival of many companies on Wall Street.
The wealth management business also held up well with revenue up 7%, while that from asset management soared 38%.
Investment bank, JPMorgan is less exposed than general practitioners
As an investment bank, Morgan Stanley is much less exposed than the large universal banks, such as JPMorgan Chase or Citigroup, to the plight of individuals and SMEs, at a time when unemployment remains at a high level and where many companies have had to, temporarily or permanently, lower the curtain.
To deal with possible defaults by its customers, it set aside $ 111 million in the third quarter, against $ 239 million in the previous quarter, a far cry from the billions set aside by its competitors whose activities range from loans to households to advice to companies wanting to grow in size.
Although it still benefited well this quarter from its brokerage and investment activities, Morgan Stanley is looking to diversify its sources of income for activities earning more regular commissions by focusing on wealth and asset management.
The bank recently completed the acquisition of online brokerage firm E-Trade and announced plans to buy asset manager Eaton Vance.