On Wednesday, Morgan Stanley reported third-quarter earnings and beat profit predictions, though revenue estimates were fulfilled. Despite this, the bank's stock price declined.
Morgan Stanley reported third-quarter results on Wednesday that beat LSEG's (formerly Refinitiv) profit expectations. Profit decreased 9% to $2.41 billion, or $1.38 per share, and revenue increased 2% to $13.27 billion, which was largely in-line with estimates. The company witnessed higher trading profits while their wealth management, investment banking, and investment management divisions saw weaker revenue figures. Despite the increased trading revenue, the stock fell 8%. Wealth management generated $6.4 billion in revenue, below the StreetAccount estimate by more than $200 million, owing to higher compensation costs. Investment banking produced $938 million, lower than the expected $1.11 billion, reflected by a decline in mergers and IPO listings. On the other hand, bond and equity traders generated $1.95 billion and $2.51 billion in revenue respectively, $200 million and $100 million higher than expected. Morgan Stanley's CFO said that net interest income will fall again in the fourth quarter.
James Gorman, the CEO, commented on a "varied" atmosphere with regards to his business enterprises while admitting that the wealth management division hadn't managed to attract as many fresh resources as it had in past quarters. This is mainly due to interest rates spiking and making money markets and Treasuries more appealing, he told analysts on Wednesday. Gorman still asserted that the wealth management segment is on track to achieve its objective of amassing $1 trillion of new assets within three years. "When people have the choice of earning a 4%, 5% return without having to do anything, they won't be investing in the markets," Gorman remarked.
Under Gorman's leadership since 2010, Morgan Stanley has been largely spared from the turbulence that has afflicted many of its rivals. Goldman Sachs had to make an adjustment following a dive into retail banking, while Citigroup is still trying to lift its stock price. With Gorman's expected departure in the near future, the company has focused its attention on finding a new CEO from its three top internal executives. Gorman noted that Morgan Stanley is "in excellent shape despite the geopolitical and market turmoil" and that he hopes to pass on an unencumbered business when he hands over the reins. JPMorgan Chase, Wells Fargo, Citigroup, Goldman Sachs, and Bank of America all posted better-than-anticipated results in their third-quarter profits, largely due to low credit costs and strong bonds trading.
Meanwhile, Morgan Stanley's profit was down 9% to $2.41 billion, or $1.38 a share, from the previous year.
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