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Morgan Stanley profit beats, deals power advisory business to record high

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(Reuters) -Morgan Stanley on Thursday reported a bigger third-quarter profit than expected, as it closed more deals and generated a record $1.27 billion from advisory business during the three months.

The Wall Street bank benefited from global mergers and acquisitions touching a new high, with deals totaling $1.52 trillion being announced in the three months ended Sept. 27.

The figure represents a growth of 38% year-over-year, higher than any quarter on record, as per Refinitiv data.

Morgan Stanley is positioned third in the global M&A league tables, which rank financial services firms based on the amount of M&A fees they generate, trailing behind rivals Goldman Sachs Group Inc and JPMorgan Chase & Co.

Institutional securities, which houses the sales and trading and investment banking units, the bank’s largest reporting lines, generated net revenue of $7.5 billion, up around 22% from a year earlier.

Revenue from its investment banking unit, comprising advisory, equity and fixed income underwriting businesses, came in at $2.85 billion, compared to $1.71 billion a year ago.

Fees from equity underwriting stood at $1.01 billion, with the bank acting as an underwriter on some of the most anticipated stock market debuts, including Salesforce-rival Freshworks Inc, restaurant software maker Toast Inc and Federer-backed shoemaker On Holding AG.

Net income applicable to common shareholders rose to $3.58 billion, or $1.98 per share, in the three months ended Sept. 30, from $2.6 billion, or $1.66 per share, a year earlier.

Analysts were expecting a profit of $1.68 per share, according to Refinitiv data.

Net revenue rose to $14.75 billion in the third quarter, compared with $11.72 billion a year earlier.

Shares of Morgan Stanley were up 1.7% in premarket trading.

Reporting by Sohini Podder in Bengaluru and Matt Scuffham in New York; Editing by Arun Koyyur

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