Morgan Stanley’s Profit Drops On Wall Street Slowdown
The profits for the third quarter at Morgan Stanley dropped by 9% from the previous year as revenues from the investment banking and trading dropped, another sign that Wall Street keeps struggling to recover from the prolonged slump.
Investors signalled their disappointment and sent the firm’s stock down by almost 7% on Wednesday. This was the biggest single day drop in almost three years. In the previous three months, the stock was down by 13%, which is a sharper decline compared to all its big-bank peers.
“Morgan Stanley’s third quarter earnings result also ranked near the bottom of the big banks. Its drop in profit was smaller than the 33% decline at rival Goldman Sachs (GS) but it trailed profit jumps reported by JPMorgan (JPM), Bank of America (BAC), Wells Fargo (WFC), and Citigroup (C).”
– Yahoo Finance.
Its investment banking revenues dropped 27% from the previous year, which placed it at the end of all other big banks with sizable Wall Street operations.
The fees for investment banking at Goldman Sachs, Citigroup, and Bank of America all increased from the previous year. At JPMorgan, these fell by a much lesser degree of 2.6% for the same time period.
The revenue of Morgan Stanley from trading stocks and bonds was also low, by 4%. Its investment and stock management units both reported over-the-year profits but fell short of what analysts expected.
“While the market environment remained mixed this quarter, the firm delivered solid results,” CEO James Morgan said. “Boards of directors are sitting there saying, until we understand the cost of financing, it is very difficult to pull the trigger on some of these capital transactions,”
he further added.
“Unfortunately I’m not going to be around to enjoy it. I don’t know if it’s six months out or nine months out or it starts three months out, but this thing is going to start turning and then rates will be the kick when they start coming down.”
he said.
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