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Morgan Stanley (MS +6%) is trading nicely higher after reporting healthy EPS upside with its Q3 report this morning. This was Morgan Stanley's third consecutive double-digit EPS beat and was significantly larger than Q2's beat. Revenue grew a robust 15.9% yr/yr to $15.38 bln, which was more than $1 bln better than expected.

• Its Institutional Securities segment posted impressive results with revenue jumping 20.2% yr/yr to $6.82 bln, reflecting strong performances in Equity and Fixed Income on higher client activity. Also, MS is seeing increased momentum in Investment Banking, with revs surging 56% yr/yr to $1.46 bln as fixed income underwriting more than doubled. Equity revenue increased 21% driven by increased client activity, particularly in the Americas and Asia.
• The company cited improved underwriting markets combined with increasing participation among financial sponsors and corporates across investment banking. Also, activity outside the US drove the segment's outperformance. Its global footprint positioned MS to capture share as risk events around the world drove activity, including the Bank of Japan's monetary policy changes, shifting expectations around the size and the timing of the Fed's first rate cut and China's announced stimulus.
• Wealth Management, its largest segment, was another bright spot with revs up 13.5% yr/yr to $7.27 bln. The increase was fueled by higher asset levels and the cumulative impact of positive fee-based flows. And finally, Investment Management segment revenue grew 9% yr/yr to $1.46 bln as asset management and related fees increased from a year ago on higher average AUM driven by higher market levels.
• Morgan Stanley noted that, just over the past year, total client assets are up almost $1.4 trillion. Total client assets across Wealth and Investment Management have now reached $7.6 trillion on the road to $10 trillion.

Overall, this was a great quarter for Morgan Stanley, similar to what we have seen from the other investment banks thus far. The headline numbers were quite good with big beats on both EPS and revenue. What really jumped out was the huge growth in investment banking revs for a second consecutive quarter, fueled by fixed income underwriting more than doubling.

Something that also jumps out at us is Morgan Stanley's large exposure to Wealth Mgmt. Morgan Stanley's exposure is bigger than many other investment banks. With the Fed cutting rates and the stock market near new highs, that has caused investor assets to swell which is great news for the company. With MS saying it's on the path to $10 trillion in client assets, this is an area which should fuel earnings growth in the future. Finally, the stock recently broke above its $90-110 multi-month trading range to hit new all-time highs and this report is fueling further gains.