(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 congratulated himself.
During an audio conference with analysts, Mr. Gorman clarified that the market environment had “remained mixed, continuing on the same pattern as previous quarters”.
He spoke of “uncertainties” in the United States, linked to the tight labor market, high prices of raw materials and the inflation context.
But “overall, our group is in excellent shape despite the geopolitical and market turmoil in which we operate,” he noted.
Better than the consensus
Between July and September, Morgan Stanley achieved revenue of $13.27 billion, up 2% year-on-year.
Its net profit stood at $2.26 billion, a decrease of 9% year-on-year, but an increase of 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 consensus of analysts who 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% drop in investment banking due to fewer mergers and acquisitions and IPOs.
Mr. Gorman mentioned “momentum” in the M&A sector but expects the bulk of activity to arrive only in 2024.
In fixed-yield investments, Morgan Stanley noted “lower activity on the part of its clients and less favorable market conditions (which) pushed down commissions and exchange fees”. Their turnover fell by 11%.
Mr. Gorman, who plans to leave his position 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 certain period of time”.
“I will leave as soon as possible as soon as the board of directors is comfortable to make its decision” concerning 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. (Eastern time), Morgan Stanley shares lost 7.33% to $74.44 on the New York Stock Exchange.