Morgan Stanley shares plunge after profits drop on slowdown
New York | Morgan Stanley shares plunged after third-quarter earnings slid amid sluggish results from the firm’s investment bank and a miss in wealth management.
Revenue from the fixed-income trading business slumped 11 per cent and, along with muted fees from dealmaking, caused a drop in net income. Revenue of $US6.4 billion ($10.1 billion) from the bank’s wealth-management business missed analysts’ estimates, and net new assets slumped to $US35.7 billion, the lowest in more than three years.
Morgan Stanley outlined a plan earlier this year to almost double pretax profit from the firm’s wealth-management business to $US12 billion annually. AP
The stock was 7.4 per cent lower near 11.15am (12.15am AEDT), putting it on track for the biggest post-earnings drop in at least a decade.
Even with the declines, Morgan Stanley joined the biggest US banks in surpassing trading expectations. Chief executive James Gorman has been expressing hope for a rebound in deals and capital raising, saying last quarter that slumping investment-banking fees had bottomed and will rebound in the months ahead, with a return to normalcy likely next year.
“This is solid performance in a mixed environment,” Morgan Stanley chief financial officer Sharon Yeshaya said. “Our announcements in terms of M&A this quarter were up 50 per cent on a year-over-year basis. We see the backlog continuing to grow”, with everything pointing to a rebound.
Gorman, who has been running the bank since 2010, is nearing the end of his tenure. He has vowed to have a successor named before May, though a decision could come months ahead of that deadline. The three candidates in the running to replace him are Ted Pick and Andy Saperstein, the firm’s co-presidents, and
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