Morgan Stanley’s third-quarter profit showed a hit from lethargic dealmaking and shares sank 6.5% on Wednesday as investors were also disappointed by smaller inflows to the wealth management division and the lack of announcements in the CEO succession.
The bank saw a 27% drop in investment banking revenues from a year earlier and sluggish trading as dealflow took a hit when geopolitical risk rose and the Federal Reserve aggressively raised interest rates. Morgan Stanley underperformed the market, with global investment banking fees down 17% in the quarter according to Dealogic.
The wealth division and trading unit were hit by the rise in interest rates as clients opted to invest in money market funds instead of putting it in wealth management portfolios, he added.