Morgan Stanley’s (N:MS) profit plummeted 42%, dropping for the second quarter in a row. Morgan Stanley, the last major US bank to release its earnings, said its revenue fell to $2.03 billion, 17.2%, on the period.
The decline lead to a 42% drop in shareholder profit. Profits were hurt by investors fleeing the currency, bond, and commodity markets as China’s economy cools and the timing of the US interest rate hike is unknown.
Morgan Stanley’s shares dropped 5.8% in premarket trading. The bank joins Citigroup Inc. (N: C), Goldman Sachs Group Inc. (N: GS), and J.P. Morgan Chase & Co (N: JPM) in reporting reduced revenue. Since the quarter has been generally downbeat for the six US major banks. Wells Fargo & Company (N: WFC) was the only major bank to increase its revenue. Citygroup saw the biggest rise in net profit, 51%, thanks to cost cuts.
Analysts were expecting Morgan Stanley to report earnings of $.62 per share. And the banks wealth management business dropped 3.5%, but still accounted for 46.9% of revenue. Last quarter, wealth management accounted for 42.4%.
Morgan Stanley has moved away from volatile businesses, like bond trading, and is now focusing on wealth management to free up capital.
Weak trading revenues will mean that traders and Wall Street bankers will get much smaller bonuses this year.