Morgan Stanley profit plunges 42% as trading revenue slumps

[BENGALURU] Wall Street bank Morgan Stanley's profit slumped for the second straight quarter as investors fled the bond, currency and commodity markets amid uncertainty about the timing of a US interest rate hike and concerns about China's cooling economy.

Morgan Stanley, the last of the big US banks to release third-quarter earnings, said earnings applicable to common shareholders fell 42.4 per cent, to US$939 million, or 48 cents per share, from US$1.63 billion, or 83 cents per share, a year earlier.

The bank's shares were down 4.9 per cent in premarket trading on Monday.

Analysts on average had expected earnings of 62 cents per share, according to Thomson Reuters. It was not immediately clear if the reported figures were comparable.

Consolidated net revenue fell 12.8 per cent to US$7.77 billion in the three months ended Sept 30.

Trading revenue fell about 17 per cent to US$2.03 billion. "The volatility in global markets in the third-quarter led to a difficult environment, impacting in particular our fixed income business and our Asia merchant banking business," Chief Executive James Gorman said in a statement.

Morgan Stanley joins arch rival Goldman Sachs Group Inc as well as Citigroup Inc, Bank of America Corp and JPMorgan Chase & Co in reporting a drop in revenue from trading.

The results capped a generally downbeat quarter for the six big US banks.

Among them, only Wells Fargo managed an increase in revenue while Citi turned in the biggest rise in net profit, largely due to cost cuts.

Revenue from investment banking, a traditional strength for the bank, fell 15.3 per cent to US$1.31 billion in a strong M&A market.

Morgan Stanley ranked second globally in mergers advisory volumes in the first nine months of the year, after Goldman, according to Thomson Reuters data.

REUTERS