Quiver Quantitative - Morgan Stanley (NYSE:MS) experienced a significant slump in its stock, witnessing its largest drop since June 2020. This descent is attributed to a remarkable dip in fees from dealmakers – the most severe on Wall Street – and its wealth management division recording the lowest asset inflows in over three years. The firm's investment banking revenue tumbled by 27%, with wealth management revenue failing to meet analysts' expectations. Furthermore, net new assets were reported at $35.7 billion, a figure reminiscent of the pandemic's peak. The bank had previously set ambitious goals following the acquisition of ETrade, but a slowdown in wealth management is evident, with the net interest income hitting a low unseen in two years. Morgan Stanley CEO, James Gorman, has conveyed optimism, foreseeing a potential resurgence in deals and capital raising in the coming months.
Despite the disappointing figures, Morgan Stanley managed to exceed trading expectations, similar to other major US banks. The bank’s CFO, Sharon Yeshaya, emphasized the significant growth in their M&A announcements, indicating a hopeful upturn. As James Gorman approaches the end of his leadership tenure at Morgan Stanley, three candidates, namely Ted Pick, Andy Saperstein, and Dan Simkowitz, are being considered as successors. It's noteworthy that, despite the setbacks, the bank's quarterly net income totaled $2.44 billion, slightly surpassing the average analysts' predictions.
On its roadmap earlier this year, Morgan Stanley projected a significant amplification in the pre-tax profit from its wealth-management division, targeting $12 billion annually. However, this quarter's asset flows markedly trailed the momentum seen in the first half of the year. Nevertheless, Yeshaya comments that fluctuations are anticipated, and the focus remains long-term.
In comparison to its competitors, Morgan Stanley's fixed-income trading business documented revenues of $1.95 billion, while equity revenues were posted at $2.51 billion. These figures stand against Goldman Sachs Group Inc (NYSE:GS).'s $2.96 billion and JPMorgan (NYSE:JPM) $2.07 billion. Furthermore, advising fees witnessed over a third's reduction, settling at $449 million. Despite these challenges, Morgan Stanley secured a pivotal role in Exxon Mobil (NYSE:XOM) massive acquisition deal, advancing its global ranking in M&A advisory roles.
This article was originally published on Quiver Quantitative