INSUBCONTINENT EXCLUSIVE:
Morgan Stanley posted a 32% fall in quarterly profit on Thursday as its advisory and wealth management businesses took a hit from the
economic fallout of the COVID-19 pandemic.
The results capped first-quarter earnings from big United States banks, marked by significant
declines in profit and billions in provisions to cover for a wave of expected loan defaults due to a global economic slowdown triggered by
the pandemic.
Morgan Stanley's wealth management unit, which contributes roughly half of its total revenue, fell 8% to $4.04 billion, as
it bore the brunt of the ongoing turmoil in financial markets.
The wealth business, which the bank has relied on as a reliable source of
revenue during periods of market volatility, reported a pre-tax margin of 26.1%, below the bank's target range of 28-30%.
"Over the past
two months, we have witnessed more market volatility, uncertainty and anxiety as a result of the devastating COVID-19 than at any time since
the financial crisis," Chief Executive Officer James Gorman said.
Advisory revenue fell 11% as dealmaking took a beating in the quarter as
businesses braced for a massive slowdown in the coming months.
The bank's trading desks were a bright spot with a 30% surge in revenue,
boosted by wild swings in markets during the quarter
This was led by a 29% jump in bond trading and a 20% rise in equities.
"While it's too early to predict how this will unfold, Morgan
Stanley navigated the quarter well given the conditions," Gorman said.
The bank said earnings attributable to common shareholders fell to
$1.59 billion, or $1.01 per share, in the first quarter ended March 31, from $2.34 billion, or $1.39 per share, a year ago.
Analysts had
expected a profit of $1.14 per share, according to IBES data from Refinitiv.
