(Corrects wealth management pretax profit margin in 6th
paragraph to 13 pct from 14)
* Adjusted profit 28 cents/share vs Street view 24 cents
* Bond trading revenue rises
* Shares up nearly 2 pct in premarket trading
By Lauren Tara LaCapra
Oct 18 Morgan Stanley on Thursday
reported better-than-expected adjusted earnings for the third
quarter as it boosted revenue from trading bonds, long a sore
spot for the investment bank.
Income from continuing operations totaled $561 million, or
28 cents per share, compared with $64 million, or 2 cents per
share, a year earlier.
On that basis, analysts had been expecting 24 cents per
share, according to Thomson Reuters I/B/E/S. Morgan Stanley
shares rose nearly 2 percent in premarket trading after the
results were reported.
The main driver of the higher adjusted earnings were
improvements in its institutional securities business, which
includes trading and investment banking.
Pretax income in that business, excluding debt valuation
adjustments, was $345 million, compared with $37 million a year
Morgan Stanley's global wealth management business also
showed improvement, excluding one-time integration costs and
buying an additional stake in a retail brokerage joint venture
with Citigroup Inc. The adjusted pretax profit margin for
the business rose to 13 percent from 11 percent. Management has
targeted a pretax margin in the "mid-teens" for wealth
management by next year.
Overall, Morgan Stanley lost money in the third quarter due
to a $2.3 billion accounting charge to reflect an increase in
the value of the bank's debt.
Including that charge, Morgan Stanley lost $1 billion, or 55
cents per share, in the quarter.
U.S. accounting rulemakers are changing the rule that
requires earnings to reflect changes in a bank's debt values.
Analysts and investors tend to ignore income and losses from
debt value adjustments because the adjustments swing wildly but
have little impact on a bank's daily business.
(Reporting By Lauren Tara LaCapra; Editing by Gerald E.
McCormick and John Wallace)