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Morgan Stanley shares plunged the most since June 2020 after the firm’s dealmakers posted the biggest drop in fees on Wall Street and its wealth management unit had the lowest inflows in more than three years.
Investment banking revenue slid 27% and the fixed-income trading business slumped, leading to a drop in profit. Revenue of $6.4 billion from the firm’s wealth-management business missed analysts’ estimates, and net new assets were $35.7 billion, the least since the depths of the pandemic.
The stock dropped as much as 7.9% in New York trading, putting it on track for the largest post-earnings drop in at least a decade. The move was greater than the 5.5% slide in shares this year.
The wealth management slowdown came after Morgan Stanley set ambitious targets for a business that has taken off following the acquisition of ETrade. The bank’s net interest income of $2 billion in the quarter was the lowest in over two years as wealthy clients sought out higher yields on their deposits.
Investors are likely focused on “what drove the weaker net new assets trends in particular, and whether this is the trough in net interest income, as rates appear higher for longer,” Goldman Sachs analysts led by Richard Ramsden wrote in a note before markets opened. “Net new assets were worse than Morgan Stanley’s long-term guidance.”