Top US investment bank Morgan Stanleysaid today its second-quarter earnings dropped 36 per cent as the weak stock market hurt stock trading revenues, brokerage commissions and fees from helping companies to sell stock.
Weak markets hit Morgan Stanley's results on three fronts - trading revenues fell, its brokerage customers traded less and fewer companies chose to sell shares, an activity that carries fat banking fees.
Morgan Stanley reported net income of $930 million compared with $1.26 billion, in last year's second quarter.
Stock markets sagged during the quarter, keeping private companies on the sidelines, fearing shares of an initial public offering would perform poorly. The value of IPOs dropped 59 per cent to $12 billion in the period, according to Thomson Financial Securities Data.
Corporate deal-making was down, as well, with the total value of mergers and acquisitions declining 40 per cent to $274.6 billion. Companies were less likely to use their beaten-down stocks as currency in a deal.
Morgan Stanley's underwriting revenue fell 29 per cent to $495 million, mostly due to less global stock offering activity, the company said. Advisory revenues fell 55 per cent to $291 million.
Morgan Stanley's shares closed at $59.35 yesterday on the New York Stock Exchange, below their 52-week high of $110.
The shares are down 24 per cent since the beginning of the year, underperforming the Amex Broker-Dealer Index, which is down 13 per cent this year.