Morgan Stanley released its third quarter earnings report before opening bell this morning, posting a wide miss of 34 cents per share in adjusted earnings and adjusted revenue of $7.33 billion. Analysts had been expecting earnings of 63 cents per share and revenue of $8.54 billion. In last year’s third quarter, the firm reported earnings of 64 cents per share.
Morgan Stanley’s earnings fall
Reported earnings were 48 cents per share, compared to last year’s 83 cents per share. Including accounting adjustments, Morgan Stanley (NYSE:MS)’s revenue was $7.77 billion, compared to last year’s $8.91 billion.
The firm’s Institutional Securities business saw net revenues excluding DVA fall from $4.3 billion to $3.5 billion this year. Management said they continued to see strength in Equity sales and trading. Advisory revenues rose from $392 million to $557 million, while Equity sales and trading net revenues were flat at $1.8 billion.
The Wealth Management business saw net revenues fall from $3.8 billion to $3.6 billion. Asset management fee revenue ticked upward from $2.1 billion last year to $2.2 billion this year. Transactional revenues fell from $912 million to $652 million.
Morgan Stanley’s Investment Management saw net revenues fall from $667 million last year to $274 million this year. Management blamed changes in its Asian private equity business’ previously accrued carried interest and weak results from the Traditional Asset Management segment.
Morgan Stanley updates capital ratios
As of the end of September, Morgan Stanley had a Common Equity Tier 1 Basel III Advanced Approach transitional provision ratio of about 13.9% and a Tier 1 risk-based capital ratio of about 15.6%. The firm’s pro forma fully phased-in Common Equity Tier 1 risk-based capital ratio under the Advanced Approach was about 12.4% at the end of last month, while its pro forma fully phased-in Supplementary Leverage Ratio was about 5.5%.
Book value per share was $34.97 and tangible book value per share was $29.99 per share at the end of September, based on about 1.9 billion outstanding shares.
As of this writing, shares of Morgan Stanley were down 6.72% at $32 per share.