(New York) The American bank Morgan Stanley announced on Wednesday a net profit above consensus in the third quarter, which was based on the good billing of commissions in asset management as well as in various securities investments.
“While the market environment remained mixed during the quarter, the group achieved solid results,” commented James Gorman, boss of the bank, quoted in a press release.
“Our equity and fixed income investment businesses navigated the markets well,” while “wealth and asset management delivered year-on-year higher revenue and profit on the other,” he said happily.
During an audio conference with analysts, Mr. Gorman specified that the market environment had “remained mixed, continuing along the same pattern as previous quarters.”
He spoke of “uncertainties” in the United States, linked to the tight labor market, high commodity prices and the inflation context.
But “overall, our group is in excellent shape despite the geopolitical and market turmoil in which we operate,” he noted.
Between July and September, Morgan Stanley had revenue of $13.27 billion, up 2% year-over-year.
Its net income was $2.26 billion, down 9% year-over-year, but up 10% compared to the previous quarter.
Reported per share and excluding exceptional items – a benchmark for the markets – it stands at $1.38 compared to $1.47 a year earlier. This is better than the analyst consensus which expected $1.31.
Like Goldman Sachs, which published its results on Tuesday, Morgan Stanley made provisions for bad debts linked to loans in commercial real estate.
Wealth management generated revenue of $6.4 billion (5%), with a pre-tax margin of 26.7%. This activity benefited from an average level of assets higher than the previous year and the positive effect of asset flows on commissions charged.
In its investment activities, the bank suffered a 27% decline in merchant banking due to fewer mergers and acquisitions and IPOs.
Mr. Gorman mentioned “momentum” in the M&A sector but expects the bulk of the activity to arrive only in 2024.
In fixed-yield investments, Morgan Stanley noted “lower client activity and less favorable market conditions (which) drove down foreign exchange commissions and fees.” Their turnover fell by 11%.
Mr. Gorman, who planned to leave his role as general manager, returned to his departure which must take place before the next general meeting of the bank. Then he must remain executive chairman “for a period of time.”
“I will leave as soon as possible as soon as the board of directors is comfortable to make its decision” regarding the next boss, he said on Wednesday. “I don’t want to give a precise timetable […] but we are well advanced,” he said.
Around 11:20 a.m. ET, Morgan Stanley shares were down 7.33% at $74.44 on the New York Stock Exchange.