By Dow Jones Business News, October 18, 2013, 07:42:00 AM EDT
By Saabira Chaudhuri
Morgan Stanley ( MS ) swung to a third-quarter profit, solidly beating analyst estimates, as strong results in the
company's wealth management business helped offset a slump in fixed-income trading revenue.
Shares jumped 4.2% to $30.15 premarket trading. Through Thursday's close, the stock has risen 51% so far this year.
For the quarter, Morgan Stanley reported net income of $906 million, compared with a year-earlier loss of $1.02
billion. The year-ago figures were weighed down by a charge of more than $2 billion related to the mark-to-market
changes in Morgan Stanley debt prices.
The results underscore efforts by Chief Executive James Gorman to transform the New York investment bank into a less
risky, more diversified firm.
At Morgan Stanley, results beat the consensus estimates of analysts polled by Thomson Reuters.
This year's figures showed progress in the company's move to grow its wealth management business while reducing its
dependence on less volatile bond-trading businesses.
Wealth-management revenue rose 8% from a year earlier while fixed-income trading revenue-- excluding DVA--was down 43%
from a year earlier to $835 million.
Morgan Stanley has accelerated its push away from trading, closing the final stage of its multi-year deal to buy the
old Smith Barney brokerage business from Citigroup Inc. ( C ) The two banks had previously had a joint venture, but
Citigroup sold its remaining stake to Morgan Stanley in June
For the third quarter, Morgan Stanley's per-share earnings, which reflects the payment of preferred dividends, were 45
cents compared with a loss of 55 cents a share a year earlier.
Stripping out the impact of changes in the value of the company's own debt, or DVA, per-share earnings were 50 cents
versus 28 cents a year ago.
Excluding DVA, revenue rose 7.4% to $8.1 billion. Analysts polled by Thomson Reuters most recently expected per-share
earnings of 40 cents, on revenue of $7.7 billion, both excluding DVA.
Write to Saabira Chaudhuri at email@example.com
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