Morgan Stanley’s investment bankers scored their best quarter ever, boosted by a torrid pace of dealmaking.

The division hauled in $2.85 billion in the third quarter, a 67% jump that topped analysts’ estimates and helped drive firmwide profitability higher. Equity-trading revenue surged 24% to $2.9 billion.

“We had standout performance of our integrated investment bank and record net new assets of $135 billion in wealth management,” Chief Executive Officer James Gorman said in a statement Thursday.

Wall Street’s top firms have been capitalizing on a golden era for dealmaking and trading since the start of the pandemic. Now, as a trading slowdown takes hold, investment bankers have been picking up the slack, with booming capital markets and merger-advisory businesses generating record fees.

Bank of America Corp. said earlier Thursday that its third-quarter results got a boost from higher fees at the dealmaking unit. JPMorgan Chase & Co. said Tuesday its mergers-and-acquisitions business posted its best quarter ever. 

Shares of Morgan Stanley, which have advanced 44% this year, climbed 1.6% to $100.10 at 7:55 a.m. in early New York trading. The New York-based firm’s gains throughout the pandemic have been outpacing rivals with consumer operations, which suffered during the crisis.

Morgan Stanley’s investment-banking revenue surpassed the average estimate of $2.1 billion. Advisory fees more than tripled to $1.27 billion and equity underwriting climbed 16% to $1 billion.

The bank’s advisory business had a less stellar first half of 2021, when it gave up ground to some of the firm’s closest rivals and got off to its weakest start in at least a decade. 

Morgan Stanley boosted pay for its junior bankers for a second time in August, a sign of its resolve to fight for talent amid more intense competition. 

Trading revenue surpassed last year’s figures, with the division pulling in $4.52 billion, higher than last year’s third quarter figure of $4.27 billion.

Wealth-management revenue totaled $5.94 billion, an increasingly growing share of the bank’s overall revenue pool that’s less volatile than its institutional-securities business, which houses traders and dealmakers. 

The bank’s only major hiccup was in its investment-management business, where it had asset outflows tied to an asset manager’s redemption. It also had a $17 million loss on performance-based income tied to an investment in Asia, according to the statement.

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