NEW YORK (CNNMoney.com) -- Morgan Stanley capped off an unexpectedly strong fiscal third quarter for investment banks with solid gains of its own and reiterated confidence that deal-making continues to be strong for the industry.

The country's largest investment bank, which also has brokerage and credit card units, said net income rose to $1.85 billion, or $1.75 a share, for the third quarter ended Aug. 31. That's up from $144 million, or 13 cents, a year ago, when it absorbed a $1 billion charge.

Analysts, on average, expected Morgan Stanley (up $0.64 to $72.49, Charts) to earn $1.37 a share, according to earnings tracker Thomson First Call.

The news sent shares of the company to a new 52-week high and helped lift the stock prices of its competitors.

Last week, competitors Goldman Sachs (Charts), Lehman Brothers (Charts) and Bear Stearns (Charts) all wowed Wall Street with better-than-expected earnings results. Analysts had cut their estimates on the group in recent weeks on concerns that market volatility and economic uncertainty would eat into their trading operations and make corporations wary of any deal making.

But Morgan Stanley's financial chief David Sidwell said corporate clients are still eager to make deals, particularly M&A transaction and debt offerings.

Sidwell said the company's pipeline of M&A deals is up since the second quarter, although the number of equity offerings in the pipeline fell significantly.

Sidwell said equity volume is down 40 percent from last quarter but the drop is unrelated to Morgan Stanley's franchise or its relationship with clients.

"The equity issuance calendar stalled and that hasn't restarted yet," he said. "We would expect that market to come back."

Analysts said Morgan Stanley has truly turned a corner under the leadership of its chief executive John Mack, who took over the troubled firm last year in the midst of corporate in-fighting, key executive departures and weak performances from its money management, credit card and brokerage businesses.

"The firm has been in a cleaning process," said Louise Westerlind, analyst in the securities and investment group at independent research and consulting firm Celent LLC. "John Mack is very focused on looking into every aspect of the company and I think he's done quite well."

Still, she said the industry will have to continue to be vigilant about the economy for signs that M&A activity and other capital-raising deals could be in for a slowdown.

Bear Stearns financial chief Samuel Molinaro was careful to caution analysts during the company's earnings call last week that if the market turns lower, deals may not come to fruition.

"It's great that it has gone so well for these Wall Street firms in the third quarter," Westerlind said. "But I also think that a conservative view of the economy is something to consider."

In the third quarter, Morgan Stanley reported that institutional-securities revenue rose 20 percent to $4.99 billion, fueled by strong equities, debt and commodities trading and hedge funds servicing.

Merger advisory fees rose 19 percent to $461 million, while equity issuance lifted underwriting revenue 7 percent to $548 million in the quarter

Revenue at global wealth management, the firm's long-struggling brokerage arm, gained 9 percent to $1.37 billion.

Revenue at the Discover credit card division - an area that was once struggling so much that the company considered selling the unit - climbed 15 percent to $1.05 billion.

Sidwell said delinquency and charge-off rates for the Discover card unit have climbed since the second quarter and he expects credit costs to also rise off of unusually low levels during the past two quarters.

He also expects the unit will ramp up marketing expenditures in the fourth quarter.

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