Morgan Stanley’s first-quarter profit beat estimates on Tuesday, fueled by a resurgence in investment banking led by equity underwriting where revenue more than doubled, sending its shares up 3.8% before the bell.

Investment banking revenue climbed 16% from a year ago, while fixed-income underwriting did well for a second quarter in row, driven by higher bond issuance. Wealth management was also a bright spot in the first quarter.

The good results reflected the strength and diversity of the business model, specially the stability of revenue in wealth management, Chief Financial Officer Sharon Yeshaya told Reuters in an interview.

On investment banking, Yeshaya said equity markets may fuel a positive cycle.

“The IPOs that have come to market have done well, and that is positive, it helps the advisory business. It helps financial sponsors to come to the market with assets they may be looking to dispose,” she said.

The Wall Street giant reported profit of $2.02 per share sailing past analysts’ average estimate of $1.66, according to LSEG data. Total revenue rose to $15.14 billion compared with $14.5 billion a year ago.


Investment banking activity has rebounded from a two-year dealmaking drought as large corporates issued near-record levels of debt and equity capital markets became more active.Still, Morgan Stanley’s revenue from the segment came in weaker than its main rival Goldman Sachs. Goldman impressed markets on Monday with a 28% rise in profit due to more fees in leading large deals and also good results in trading.

“It was an excellent quarter all around,” Chris Kotowski, an analyst at Oppenheimer, wrote in a note.

He cited better-than-expected revenue and expenses, which helped the lender achieve a “near-perfect print” like Goldman on Monday.

In their earnings last week, JPMorgan Chase and Citigroup cited rising activity, particularly in debt and equity capital markets.

Total revenue for Morgan Stanley’s institutional securities division that houses investment banking, equities and fixed income stood at $7 billion, compared with $6.8 billion a year ago. Fixed income trading revenue slid 4%, while equities rose 4%.

Morgan Stanley has built its wealth business into a powerhouse that generates more stable revenue and helps smooth out revenue from more volatile businesses such as trading and investment banking.

“As a result of strong net new asset growth, the firm has reached $7 trillion of client assets across wealth and investment management,” CEO Ted Pick said on Morgan Stanley’s first quarter under his helm.

But as the race for market share in wealth management increases, markets are focused on whether Morgan Stanley can grow assets.

Net new assets for the quarter stood at $95 billion, of which around half came from family offices, the bank said.

Wealth management revenue rose to $6.9 billion from $6.6 billion a year ago.

The unit is also reportedly facing higher regulatory scrutiny, with multiple U.S. regulators probing whether Morgan Stanley is vetting its clients and knows the origin of their wealth. The Wall Street Journal reported the probes earlier this month.

Investment management revenue of $1.4 billion was higher than $1.3 billion a year ago.

The bank’s asset management unit is aiming to double its private credit portfolio to $50 billion in the medium term, Reuters reported in January, as it gathers funds from large investors to loan out to companies.

Morgan Stanley also said it will pay an additional fees of $42 million to the U.S. Federal Deposit Insurance Corporation to fill its insurance fund that was drained last year when three regional lenders collapsed.


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