Morgan Stanley reports profit growth on investment banking rebound

Morgan Stanley announced robust first-quarter results, with profit rising due to a resurgence in investment banking activities, particularly in equity underwriting.

The Wall Street bank reported a net income of $3.4 billion, or $2.02 per diluted share, for the three months ended March 31, compared to $3 billion, or $1.70 per share, in the same period last year.

CEO Ted Pick highlighted the firm's achievement of reaching $7 trillion of client assets across wealth and investment management, driven by strong net new asset growth. Institutional Securities also witnessed strength across markets and underwriting businesses.

Shares of the investment bank rose 2.6 per cent before the bell, despite having lost nearly 7 per cent year-to-date, underperforming the S&P 500 index.

Investment banking revenue increased by 16 per cent in the quarter, with fixed-income underwriting remaining strong and equity underwriting more than doubling.

The quarter marked Morgan Stanley's first with Ted Pick at the helm, and total revenue increased to $15.14 billion from $14.5 billion a year earlier. The institutional securities division saw revenue climb to $7 billion from $6.8 billion, driven by growth in investment banking, equities, and fixed income.

Wealth management revenue rose to $6.9 billion, and the bank's asset management unit reported revenue of $1.4 billion.

Morgan Stanley has been focusing on growing its wealth management business, which provides stable revenue amidst volatile trading and investment banking businesses. However, increased competition and regulatory scrutiny pose challenges.

The bank's asset management unit aims to double its private credit portfolio to $50 billion in the medium term, reflecting its strategic focus on expanding lending to companies.

(With Reuters inputs)