Morgan Stanley beats profit estimates on capital market, deal-making boom

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(Reuters) – Morgan Stanley reported a big jump in quarterly profit on Thursday, comfortably beating Wall Street expectations, as its investment banking business benefited from record levels of activity in deal making and capital markets.

The Wall Street bank said its net income applicable to common shareholders rose to $3.4 billion, or $1.85 per share, in the second quarter ended June 30 from $3.05 billion, or $1.96 per share, a year earlier.

Analysts on average were expecting the bank to report a profit of $1.65 per share, according to IBES data from Refinitiv.

Net revenue rose to $14.8 billion in the quarter, compared with $13.7 billion a year ago.

Morgan Stanley’s blowout quarter was the result of a surge in deal-making activity in the first half of the year that smashed all-time records, with over 28,000 deals totaling volumes of over $2.82 trillion being announced between January and June, according to data from Refinitiv.

The bank, which advised on 216 deals in the first six months of the year, ranked third in the global M&A league tables during the quarter, behind Goldman Sachs Group Inc and JPMorgan Chase & Co, according to Refinitiv.

Gains from advisory fees, however, were lower than those recorded by its peers as fewer number of deals that it advised on closed during the quarter.

League tables rank financial services firms based on the amount of M&A fees they generate.

Morgan Stanley’s profit was further strengthened by its equity underwriting fees, generated from numerous high-profile initial public offerings, including ride-hailing Didi Global Inc, the biggest U.S. listing of the year.

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