{"id":2795,"date":"2023-10-18T16:15:52","date_gmt":"2023-10-18T16:15:52","guid":{"rendered":"https:\/\/infundpros.com\/business\/morgan-stanley-profits-drop-9-after-investment-banking-slump\/"},"modified":"2023-10-18T16:15:52","modified_gmt":"2023-10-18T16:15:52","slug":"morgan-stanley-profits-drop-9-after-investment-banking-slump","status":"publish","type":"post","link":"https:\/\/infundpros.com\/?p=2795","title":{"rendered":"Morgan Stanley profits drop 9% after investment banking slump"},"content":{"rendered":"<div>\n<p>Unlock the Editor\u2019s Digest for free<\/p>\n<p class=\"article__content-sign-up-topic-description\"><span>Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.<\/span><\/p>\n<p><iframe class=\"article__content-sign-up-iframe close\" scrolling=\"no\" id=\"signUpIframe\" data-prev-url=\"\/register\/in-article-sign-up?ft-content-uuid=f40c0faf-afef-459d-991c-9b31ac4d56fd\"><\/iframe><\/div>\n<div id=\"article-body\">\n<p>Morgan Stanley has reported a drop in third-quarter profits and slower growth at its juggernaut wealth management business, putting the bank\u2019s shares on track for their biggest fall in more than three years. <\/p>\n<p>The US bank on Wednesday reported net income of $2.4bn for the quarter, down 9 per cent from a year earlier and slightly ahead of analysts\u2019 estimates for $2.3bn, according to data compiled by Bloomberg.<\/p>\n<p>Morgan Stanley\u2019s earnings were hit by investment banking revenues falling almost 30 per cent from a year earlier. More troubling for investors was its wealth management unit, which has been a big growth driver for Morgan Stanley in recent years. <\/p>\n<p>Revenues in wealth management came in below analysts\u2019 estimates at $6.4bn. This was up 5 per cent from the same quarter last year but marked a slowdown from recent quarters.<\/p>\n<p>The division brought in about $36bn in net new assets, a metric closely followed by investors, during the quarter, down from $65bn in the previous quarter. <\/p>\n<p>\u201cThat\u2019s obviously below recent quarters,\u201d chief executive James Gorman said on a call with analysts. \u201cIt\u2019s consistent with what I\u2019ve been saying for a long time, these numbers will bounce around.\u201d <\/p>\n<p>Morgan Stanley shares were down more than 7 per cent in early New York trading, falling to the lowest price in the past year and putting the stock on track for its worst day since June 2020.<\/p>\n<p>Gorman, 65, is nearing the end of his tenure as chief executive after nearly 14 years. He has promised to step down by May 2024 and the bank\u2019s board of directors, which Gorman chairs, is selecting his successor from a trio of internal candidates who each lead one of Morgan Stanley\u2019s three divisions: investment banking and trading boss Ted Pick, wealth management head Andy Saperstein and Dan Simkowitz, who runs investment management.\u00a0<\/p>\n<p>Gorman said he \u201cwould leave at the earliest possible moment that the board feels comfortable making that decision, and I\u2019ve made that very clear to them\u201d. <\/p>\n<p>Investment banking revenues, which have fallen over the past 18 months amid an industry-wide slowdown in activity, were particularly sluggish for Morgan Stanley, falling 27 per cent year on year to $938mn. <\/p>\n<p>This bucked a broader trend at rivals such as Goldman Sachs and JPMorgan Chase, which either reported slight increases or only modest declines. <\/p>\n<figure class=\"n-content-image n-content-image--full\"><picture><source media=\"(min-width: 700px)\"  width=\"1400\" height=\"1000\"><\/source><source media=\"(max-width: 490px)\"  width=\"600\" height=\"800\"><\/source><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/infundpros.com\/wp-content\/uploads\/2023\/10\/https:\/\/d6c748xw2pzm8.cloudfront.net\/prod\/339df0f0-6dae-11ee-bdc5-abe4cec627de-standard.pn.png\" alt=\"Line chart of Revenues in $bn showing Investment banking revenues remain subdued\" data-image-type=\"graphic\" width=\"1400\" height=\"1000\"><\/picture><\/figure>\n<p>\u201cWhen you look at the [investment banking] deals of this particular quarter, that\u2019s based on the completed transactions,\u201d Morgan Stanley\u2019s chief financial officer Sharon Yeshaya told the Financial Times. <\/p>\n<p>The bank still had been hiring investment bankers in anticipation of a rebound, she said. <\/p>\n<p>\u201cWe\u2019ve been looking forward. So over the last 18 to 24 months we\u2019ve been hiring new talent in investment banking,\u201d she said.<\/p>\n<p>Fixed income trading revenues fell 11 per cent to $1.9bn, beating expectations of $1.8bn. Revenues from equity trading totalled $2.5bn, up per cent and also ahead of estimates for $2.4bn.<\/p>\n<p>Investment management, which is Morgan Stanley\u2019s smallest division but expanded recently through the acquisition of Eaton Vance, reported a rise in revenues of 14 per cent in the third quarter, to $1.3bn. <\/p>\n<p><em>Additional reporting by Harriet Clarfelt in New York<\/em><\/p>\n<\/div>\n<p>Read the full article <a href=\"https:\/\/www.ft.com\/content\/f40c0faf-afef-459d-991c-9b31ac4d56fd\" target=\"_blank\" rel=\"noopener\">here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Unlock the Editor\u2019s Digest for free Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter. Morgan Stanley&#8230;<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[22],"tags":[],"class_list":{"0":"post-2795","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-business"},"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v21.3 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Morgan Stanley profits drop 9% after investment banking slump | inFundPros<\/title>\n<meta name=\"description\" content=\"Unlock the Editor\u2019s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.Morgan Stanley has reported a\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/infundpros.com\/?p=2795\" \/>\n<meta property=\"og:locale\" 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