Morgan Stanley has seen its institutional securities arm in Q3 2023 drop 2.5% despite “solid results” in its equity and fixed income businesses. The firm attributed the drop largely to “muted” activity in investment banking which was down 27% compared to a year ago.
Institutional securities reported net revenues for Q3 2023 of US$5.7 billion compared to $5.8 billion in Q3 2022. Pre-tax income was $1.2 billion compared to $1.6 billion a year ago.
James Gorman, Morgan Stanley chairman and CEO, said, “Our equity and fixed income businesses navigated markets well, and both wealth and investment Management produced higher revenues and profits year-over-year.
“We completed the integration of E*TRADE in the quarter, further executing on our strategy of building revenue synergies across channels and attracting clients to our best-in-class advice offering. Our ability to gather assets, together with our strong capital position and leading client franchises, position us to deliver continued growth and strong shareholder returns going forward.”
The firm said its equity underwriting revenues increased primarily driven by higher block offerings, partially offset by lower revenues from IPOs while fixed income underwriting revenues decreased primarily driven by lower event-driven non-investment grade activity.
Equity net revenues were up 2% from US$2.4 billion to US$2.5 billion in Q3 2023 compared to Q£ 2022 which reflected “solid results” across businesses. Mark-to-market gains on business-related investments compared to losses a year ago were offset by prime brokerage due to changes in the mix of client balances.
Fixed Income net revenues were down 11% in Q3 2023 compared to a year ago from US$2.2 billion to US$1.9 billion thanks to lower client activity and unfavourable market conditions which drove declines in rates and foreign exchange. These declines were partially offset by constructive trading environments in commodities, Morgan Stanley said, as well as agency and non-agency trading.
Investment management net revenues of US$1.3 billion in Q3 2023 was an increase of 14% compared to Q3 2022 thanks higher asset management revenues and assets under management (AUM) of US$1.4 trillion.
Overall, the firm reported net revenues of US$13.3 billion for Q3 2023 compared to US$13.0 billion a year ago.
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