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Morgan Stanley profit far exceeds estimates

Morgan Stanley net revenue jumped 61% to $15.72bn

Morgan Stanley (NYSE:MS) confirmed a 150% increase in its Q1 profit on Friday that blew past expectations.

The announcement came as high trading activity supported its international securities division and a global dealmaking surge lifted investment banking.

However, the Wall Street giant also confirmed a one-time loss in excess of $900m that it said came following a credit event and resulting losses from a “single prime brokerage client”.

Morgan Stanley was one of a group of banks exposed to Archegos Capital Management, a family office that defaulted on margin calls at the end of March causing a firesafe of stocks across Wall Street.

However, despite the setback, the investment bank surpassed its expectations with ease, conceding a strong quarter for New York’s major banks that benefited from reserve releases and record capital markets activity.

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The jump in the volume of trades during Q1 of this year, powered largely by the Reddit-inspired trading surge of GameStop, among other stocks, driving a 66% spike in revenue of Morgan Stanley’s securities operation.

Morgan Stanley said net income applicable to shareholders rose to $3.98bn, or $2.19 per share, in the quarter ended March 31, from $1.59bn, or $1.01 per share, a year ago.

Analysts were looking for a profit of $1.70 per share, according to IBES data from Refinitiv.

Net revenue jumped 61% to $15.72bn.

Morgan Stanley prospered as a result of unprecedented levels in dealmaking through special purpose acquisition companies (SPACs).

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