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Morgan Stanley’s profits increased by more than 40 per cent in the second quarter, but the bank reported a slowdown in growth in its cornerstone wealth management business.
Morgan Stanley reported quarterly net income of $3.1bn, up from $2.2bn a year earlier and ahead of analysts’ estimates.
That jump was aided by a rise of just over 50 per cent in investment banking fees from a year ago, to $1.6bn.
The return of investment banking business has been a key theme of big bank results in the past two quarters.
After two years in which investors held off dealmaking and initial public offerings because of rising interest rates, investment banking revenues jumped in the second quarter by 50 per cent at JPMorgan and 21 per cent at rival Goldman Sachs.
But in Morgan Stanley’s $5.7tn wealth management division, the bank attracted net new assets of only $36.4bn, well short of analysts’ expectations for about $57.5bn and down from almost $90bn a year ago.
Net new assets in wealth management were the lowest since 2020 across the first six months of the year.
Morgan Stanley’s stock was down more than 2 per cent in pre-market trading in New York.
Wealth management has been a major driver of Morgan Stanley’s growth in recent years, boosted by its 2020 purchase of online trading platform ETrade. But its expansion has slowed more recently as client assets have become tougher to attract when interest rates are higher.
Profit margins in that business have also shrunk, as wealth clients have been able to leave money in cash and other more liquid products that offer a greater return in a higher interest rate environment but which are less lucrative for banks.
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