Morgan Stanley revenue knocked by funding banking downturn

Morgan Stanley reported a 30 per cent year-on-year fall in third-quarter web revenue, marking its longest streak of declines since 2019 because it continues to endure from a drop-off in funding banking charges.

The Wall Avenue financial institution mentioned on Friday its third-quarter web revenue was $2.6bn, or $1.47 a share, down from $3.7bn, or $1.98 a share, in the identical interval final yr. Analysts had forecast quarterly web revenue of $2.7bn, or $1.52 a share, in keeping with knowledge compiled by Bloomberg.

The financial institution’s web revenues for the quarter have been $13bn, down 12 per cent from $14.8bn a yr earlier, and barely under analysts’ expectations of $13.2bn.

“Whereas funding banking and funding administration have been impacted by the market setting, fastened revenue and fairness navigated difficult markets properly,” Morgan Stanley chief govt James Gorman mentioned in an announcement.

The declines replicate partly the stellar numbers posted in 2021 when banks like Morgan Stanley benefited from file dealmaking exercise. Nonetheless, mergers and acquisitions and new inventory market listings have slowed greater than financial institution executives have been anticipating at first of the yr.

Funding banking income fell 55 per cent to $1.3bn, barely forward of analysts’ estimates of $1.2bn. Revenues from buying and selling, which benefited from latest market volatility, have been down 3 per cent at $4.5bn, under analysts’ estimates for $4.8bn.

The financial institution additionally took $35mn in markdowns on loans being held on the market to fund bridge financing for offers like leveraged buyouts. Morgan Stanley is the lead financial institution serving to to finance Elon Musk’s $44bn takeover of Twitter, a deal that might generate losses within the lots of of tens of millions of {dollars} or extra for the lenders.

Revenues in wealth administration, which incorporates on-line buying and selling platform ETrade, have been up 3 per cent at $6.1bn, according to estimates for $6.1bn. In funding administration, which homes Eaton Vance following Morgan Stanley’s acquisition of the cash supervisor final yr, income shrank 20 per cent to $1.2bn, under estimates of $1.4bn.

Morgan Stanley’s inventory was down 2.9 per cent in pre-market buying and selling in New York.