Morgan Stanley, Goldman Sachs and JPMorgan and Chase have all recorded a strong quarter for trading, strengthened by the return of volatility. Morgan Stanley however, has reported a jump in revenues from trading making it the most profitable quarter for the bank since the financial crisis.
The revenues in institutional securities business rose by 17 per cent to $5.5 bn where equity trading revenues rose by 16 per cent to $2bn.
The bank recorded its first double digit return on equity in over seven years. James Gorman, the chief executive said the quarter has been the strongest in many years and an improvement in performance is visible across most areas of the firm. He saw the success as a reflection of the ongoing strategy to build platforms for growth while maintaining a prudent risk profile.
Return on equity for the quarter was 14.1 per cent, or as the Financial Times reported, 10.1 per cent excluding a tax benefit from a distortive accounting treatment which forces banks to take profits or losses based on changes to the value of their debt.
Last time Morgan Stanley recorded a double digit ROE was in the third quarter of 2007: just before the fall of the Lehman Brothers.
Shares in Morgan Stanley rose 2.2 per cent in the premarket trading to $37.58