A 35% surge! Morgan Stanley's (MS.US) Q3 stock trading income surpasses Goldman Sachs Group, Inc.

Morgan Stanley's stock trading business performed far beyond expectations in the third quarter, as market tension and active trading due to President Trump's policies allowed the bank to surpass its competitors in trading business. The financial report shows that Morgan Stanley's revenue in the third quarter was $18.22 billion, an 18.5% increase year-on-year; earnings per share were $2.80, higher than market expectations. In the third quarter, Morgan Stanley's stock trading revenue surged by 35% to $4.12 billion. This far exceeded analysts' expectations of 6.6% growth and exceeded the revenue of $3.74 billion in this business for Goldman Sachs Group, Inc. In recent years, Goldman Sachs Group, Inc. has dominated the stock trading business. Under CEO Ted Pick's leadership, Morgan Stanley has been eager to reclaim the top spot. The company's performance also benefited from better-than-expected investment banking revenue, which increased by 44%. Its large wealth management business also exceeded expectations after attracting $81 billion in new assets and achieving a 30% pre-tax profit margin. Morgan Stanley's stock trading business surpasses Goldman Sachs Group, Inc. Morgan Stanley and Bank of America Corp are the last two major U.S. banks to report quarterly earnings this week, with their competitors JPMorgan Chase, Goldman Sachs Group, Inc., Citigroup, and Wells Fargo & Company having reported earnings on Tuesday. After some executives' cautious attitudes cast a shadow on strong performance (especially in trading and investment banking business), investors are hoping to further understand the overall economic environment and outlook. Bank of America Corp announced better-than-expected quarterly profits early on Wednesday, benefiting from growth in investment banking revenue. After Morgan Stanley's stock traders achieved their best second quarter ever, they also achieved their best third quarter ever with the main brokerage business playing a crucial role in this record-breaking performance. Its fixed income business revenue increased by 8% year-on-year, driving total trading revenue to $6.29 billion, significantly higher than analysts' expectations of $5.5 billion. The company's wealth management business generated $8.2 billion in revenue, exceeding expectations. However, in order to achieve its goal of attracting $1 trillion in net new assets every three years by early 2023, Morgan Stanley needs to attract $232 billion in the last three months of this year nearly three times the scale of the third quarter. Total revenue reached $18.2 billion, far surpassing analysts' average expectation of $16.6 billion. Similar to Goldman Sachs Group, Inc., this also came with higher-than-expected costs: Morgan Stanley's compensation expenses for the quarter were $7.44 billion, pushing total non-interest expenses to $12.2 billion, a 10% year-on-year increase, compared to analysts' expectation of 6.8%. Last month, after Morgan Stanley requested the Fed to reassess its initial assessment, the bank received lower capital requirements from the Fed. This means that investors are eager to hear Pick's latest thoughts on excess capital, especially after Goldman Sachs Group, Inc. announced the acquisition of venture capital firm Industry Ventures earlier this week. In July, Pick stated that the company is focused on non-organic growth opportunities, but that the "bar is very high." As the market begins to worry about U.S. credit quality, Morgan Stanley reported a noteworthy loan loss provision figure: zero. The loan loss provision for the third quarter decreased compared to $79 million in the same period last year and $196 million in the second quarter. "The year-on-year decrease in loan loss provisions is mainly due to greater benefits from the improved macroeconomic situation this quarter, as well as a decrease in provisions related to portfolio growth," Morgan Stanley stated in its announcement on Wednesday.