Morgan Stanley’s third-quarter profit fell but less than expected, as strong performance at the bank’s wealth management division offset the hit from dormant investments.
The wealth management business, which has been a bright spot for Morgan Stanley in recent quarters, has reduced the US bank’s reliance on trading and investment banking, which are largely tied to economic cycles.
CEO James Gorman said in a statement: “While the economic environment remained mixed this quarter, the bank achieved strong results. Our equity and fixed income businesses performed well in the markets, and wealth and investment management achieved higher revenues.”
Net revenue from wealth management rose about 5 percent to $6.4 billion, while net new assets shrank to $35.7 billion from $64.8 billion a year ago.
Morgan Stanley’s net earnings fell about 9 percent to $2.4 billion, or $1.38 per share, during the three months ended Sept. 30. Analysts were expecting earnings per share of $1.28, according to LSEG IBES data.
The bank’s shares fell by 3 percent in pre-opening trading on the Wall Street Stock Exchange.
Total revenue from investment banking fell 27 percent to $938 million, as global M&A activity showed few signs of improvement.
Rising interest rates, antitrust scrutiny, and an uncertain economic and geopolitical outlook have reduced companies’ appetite for deals, with fixed income revenue falling 11 percent to $1.95 billion.
Global investment banking fees fell 17 percent in the third quarter compared to the same period a year earlier, to $15.2 billion.
Markets may be exposed to further tremors due to the rise in US Treasury bond yields, which has harmed investor confidence.
Morgan Stanley also set aside $134 million in provisions for credit losses, up from $35 million in the same quarter last year, driven by deteriorating conditions in commercial real estate.
2023-10-18 13:13:33
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