Morgan Stanley reported a 30 percent year-over-year decline in net income for the third quarter, marking the longest streak of declines since 2019 as it continues to struggle with a decline in investment banking fees.
Wall Street Bank said Friday its third-quarter net income was $2.6 billion, or $1.47 per share, down from $3.7 billion, or $1.98 per share, in the same period last year. Analysts expected quarterly net income of $2.7 billion, or $1.52 per share, according to data compiled by Bloomberg.
The bank’s third-quarter net revenue was $13 billion, down 12 percent from $14.8 billion a year earlier, and just below analysts’ expectations of $13.2 billion.
“While investment banking and investment management have been affected by the market environment, fixed income and equities have weathered challenging markets well,” Morgan Stanley CEO James Gorman said in a statement.
The declines partly reflect the excellent numbers released in 2021 when banks like Morgan Stanley benefited from record deal-making activity. However, mergers and acquisitions and new stock market listings slowed more than bank executives expected at the start of the year.
Investment banking revenue fell 55 percent to $1.3 billion, just above analysts’ estimates of $1.2 billion. Trading revenue, which benefited from recent market volatility, fell 3 percent to $4.5 billion, below analysts’ estimates of $4.8 billion.
The bank also set aside $35 million in provisions for credit losses, including reductions on loans for sale to fund bridge financing for deals such as debt acquisitions. Morgan Stanley is the lead bank helping fund Elon Musk’s $44 billion acquisition of Twitter, a deal that could generate losses of hundreds of millions of dollars or more for lenders.
Revenue in wealth management, which includes online trading platform ETrade, rose 3 percent to $6.1 billion, in line with estimates of $6.1 billion. At Investment Management, which includes Eaton Vance after Morgan Stanley’s acquisition of the money manager last year, revenue shrank 20 percent to $1.2 billion, below estimates of $1.4 billion.
Morgan Stanley shares fell 2.8 percent in early trading after the opening bell on Wall Street on Friday.
Originally published at San Jose News Bulletin
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