Morgan Stanley profit beats on wealth management strength
By Niket Nishant, Tatiana Bautzer and Manya Saini
(Reuters) -Morgan Stanley's third-quarter profit dropped less than expected as a strong performance in the bank's wealth management division offset a hit from lethargic dealmaking.
The wealth management business, which has been a bright spot for Morgan Stanley in recent quarters, has reduced the lender's reliance on trading and investment banking, which are largely tied to economic cycles.
«While the market environment remained mixed this quarter, the firm delivered solid results,» CEO James Gorman said in a statement. «Our equity and fixed income businesses navigated markets well, and both wealth and investment management produced higher revenues.»
Net revenue from wealth management rose nearly 5% to $6.4 billion, while its net new assets shrank to $35.7 billion from $64.8 billion a year earlier.
Morgan Stanley's profit dropped about 9% to $2.4 billion, or $1.38 per diluted share, for the three months ended Sept. 30. Analysts had expected a figure of $1.28 per share, according to LSEG IBES data.
INVESTMENT BANKING
Revenue from investment banking fell 27% to $938 million, as global mergers and acquisitions activity showed few signs of improvement due to rising interest rates, antitrust scrutiny and an uncertain economic and geopolitical outlook.
The company's shares were down 2.7% at $78.15 before the bell.
Commenting on lower investment banking revenues, specially in debt capital markets, Morgan Stanley CFO Sharon Yeshaya said they cannot be compared to rivals due to different considerations of allocation of capital.
«It is not a decision purely on fees, but capital allocation.»
Revenue from initial public offerings also fell for Morgan Stanley. The bank was not an
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