By Pritam Biswas and Saeed Azhar
Oct 14 (Reuters) - Morgan Stanley beat estimates for third-quarter profit on Wednesday, helped by higher income from investment banking and strong equity trading as markets remained volatile due to the Federal Reserve's interest-rate decision and the US-Iran war.
The turbulence forced investors to realign their portfolios, driving up trading volumes and boosting revenue at bank's trading desks. Morgan Stanley posted equity trading revenue of $5.8 billion, a nearly 41%
rise from a year ago.
Goldman Sachs, which beat estimates for third-quarter profit a day ago, also reported a similar jump in equities trading.
"The company's equities trading activity has done a lot of the heavy lifting for the bank's third quarter overall," said Daniel Coatsworth, head of markets at AJ Bell.
Morgan Stanley's revenue from its fixed income trading dropped 7.3% to $2.01 billion. The slowdown also mirrored that of Goldman Sachs whose fixed income, currency and commodities revenue came in 1% down from a year ago.
Profit attributable to Morgan Stanley came in at $4.91 billion, or $3.03 per share, in the three months ended September 30, compared with $4.61 billion, or $2.80 per share, a year ago.
Analysts were expecting a profit of $2.91 per share, according to estimates compiled by LSEG.
INVESTMENT BANKING HOLDS
Global deal value plunged 41% from the previous quarter to a total of $993 billion, LSEG data showed, dipping below the $1 trillion quarterly threshold for the first time since the second quarter of 2025.
The IPO market also remained subdued as several companies such pulled their offerings citing tough market conditions.
However, Morgan Stanley's investment banking revenue rose 2% to $2.16 billion from a year ago. Goldman Sachs also reported higher income from its investment banking division whereas JPMorgan Chase reported a slowdown.
Morgan Stanley was the lead financial advisor to Uber's deal to buy Germany's Delivery Hero at an equity value of $14.8 billion. The bank was also the lead financial advisor to castings supplier Consolidated Precision Products in its deal to be acquired by GE Aerospace for $11.75 billion.
The investment bank has also secured underwriting roles in the expected IPOs of artificial intelligence companies Anthropic and OpenAI.
US bank stocks fell sharply in the third quarter as a surge in Treasury yields to multi-decade highs triggered investor fears over rising funding costs and a prolonged slowdown in mergers and acquisitions.
Shares of Morgan Stanley have gained about 5.1% in 2026, underperforming the broader markets, but outperforming peer Goldman Sachs. The stock was trading marginally higher before the bell.
(Reporting by Pritam Biswas in Bengaluru and Saeed Azhar in New York; Editing by Arun Koyyur)
