MORGAN Stanley, owner of the world's largest brokerage, reported profit that beat analysts' estimates on a US$3.4 billion accounting gain and higher revenue from stock trading.

Third-quarter net income was US$2.2 billion, or US$1.15 a share, compared with US$131 million, or a loss of 7 US cents a share after preferred dividends a year earlier, the company said yesterday. Earnings beat the 30-cent average estimate of 25 analysts surveyed earlier by Bloomberg.

Morgan Stanley's 20 percent gain in year-on-year equities trading revenue was the biggest among the largest US banks, excluding accounting gains. Fixed income fell 17 percent. Chief Executive James Gorman, 53, is trying to stem a 39 percent decline in the firm's shares this year.

Chief Financial Officer Ruth Porat said: "We saw more activity on the cash equities side, particularly in electronic trading, and the derivatives business continued to do well. The more challenging part of the market was in fixed income."

The accounting gain - debt valuation adjustment - stems from declines in the value of the company's debt, under the theory that a profit would be realized if the debt were repurchased at a discount. Citigroup and JPMorgan Chase each booked more than US$1.5 billion of such gains as bank credit spreads widened during the quarter.

Source:shanghaidaily