Morgan Stanley profit falls on trading slowdown

[BENGALURU] Morgan Stanley reported an 11 per cent drop in first-quarter profit on Thursday (Apr 14) as equity underwriting revenue slumped from last year's highs, taking some shine off a near doubling in M&A advisory fees.

The bank's profit fell to US$3.54 billion, or US$2.02 per share, in the quarter ended Mar 31, from US$3.98 billion, or US$2.19 per share, a year earlier.

Analysts on average were expecting the bank to report a profit of US$1.68 per share, according to Refinitiv data. It was not immediately clear if the reported numbers were comparable to estimates.

The Wall Street investment banking powerhouse said net revenue rose to US$14.8 billion in the quarter from US$15.72 billion.

During the first quarter, the largest US investment banks faced turbulence stemming from Russia's invasion of Ukraine, which unsettled equity markets and forced companies to hold off on dealmaking and stock market listings.

Like rivals Goldman Sachs and JPMorgan Chase, Morgan Stanley rode a dealmaking wave last year as businesses looked to raise capital and make M&A deals and the economy started to recover from the pandemic-induced downturn.

The total value of pending and completed deals amounted to about US$900 billion by March 29, the lowest since the second quarter of 2020, according to Refinitiv data.

Equity underwriting deal volumes, too, fell 80 per cent in the quarter for Morgan Stanley and Goldman Sachs, the 2 most dominant financial advisers on initial public offerings (IPOs) globally.

Morgan Stanley, however, reported a near doubling in advisory revenues, driven by higher levels of completed M&A transactions. REUTERS