Morgan Stanley returns to 3Q profit on accounting gain

Morgan Stanley (MS) returned to a profit for the third quarter helped by a gain from a debt valuation adjustment. The investment banking giant earned $2.15 billion, or $1.15 a share, for the three months ended Sept. 30, up from a loss of $91 million, or 7 cents a share, last year. Results for the quarter include changes to credit spreads that resulted in positive revenue of $3.4 billion compared to a loss of $731 million a year earlier. The company said third-quarter revenue rose 46% to $9.89 billion from $6.78 billion a year ago. Investment banking revenue for the quarter was $864 million and equity sales and trading revenue rose to $5.4 billion on strength from derivatives. “Morgan Stanley effectively navigated turbulent markets while consolidating our market share gains with institutional clients and demonstrating resilience across the global wealth management business,” said President and Chief Executive James Gorman. Morgan Stanley said its Tier 1 capital ratio was about 15.1% with a Tier 1 common ratio of about 13.1% at Sept. 30. The company had $268 billion assets under management at Sept. 30, up from $266 billion a year ago due to higher customer inflows in liquidity funds, partly offset by lower market levels. Write to Jason Philyaw.