Morgan Stanley’s profits fall amid Wall Street slowdown

Morgan Stanley’s ( MS ) third-quarter profit fell 9% from a year ago as revenue from investment banking and trading fell, another sign that Wall Street is still struggling to recover from a prolonged slump.

Investors signaled their disappointment, with the company’s shares down about 6% in morning trading on Wednesday.

Morgan Stanley’s performance put it near the bottom of the big banks. Its profit drop was smaller than the 33% decline at rival Goldman Sachs ( GS ) , but it lagged gains at JPMorgan ( JPM ), Bank of America ( BAC ), Wells Fargo ( WFC ) and Citigroup ( C ).

Morgan Stanley CEO James Gorman. REUTERS/Brendan McDermid

Its investment banking revenues fell 27% from a year ago, placing it last among big banks with large Wall Street operations.

Investment banking fees at Goldman Sachs, Bank of America and Citigroup rose from a year ago. At JP Morgan, these fees fell by the lowest – 2.6% – for the same period.

Morgan Stanley’s revenue from trading stocks and bonds fell 4%. A bright spot was that both its wealth and investment management units posted higher profits year-on-year.

“Despite a mixed market environment this quarter, the company delivered solid results,” said CEO James Gorman, who announced in May that he would step down as chairman “at some point in the next 12 months.”

Its stock is down 5.5% year to date, outperforming all of its peers except JPMorgan Chase and Wells Fargo.

However, over the past three months, it has fallen 7%, a steeper decline than all of its big bank peers except Citigroup.

Gorman told analysts that the firm is “increasingly adding resources to the M&A and underwriting calendars.” Morgan Stanley expects most operations to be operational by 2024, while he expects “momentum to continue this year.”

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In a call with analysts, the company’s CFO Sharon Yeshaya said, “Despite weak quarterly results, we continue to see broad sector diversification of our completed deals, and the turnaround reflects a similar pattern.”

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