NEW YORK: Morgan Stanley’s profit slumped 30% on Thursday, falling short of analysts’ estimates for the first time in nine quarters, as its investment banking business struggled to cope with a slump in global dealmaking.
Revenue from investment banking plunged 55% in the second quarter, mirroring a similar drop at its larger Wall Street rival JPMorgan Chase & Co and eclipsing an 8% rise in trading revenue.
The US Federal Reserve’s aggressive actions to contain runaway inflation has rattled global financial markets, forcing corporates to curb their appetite for deals, while also slowing their efforts to raise cash through stock and debt offerings.
The turmoil has, in turn, upended a lucrative revenue stream for investment banks, whose results are also facing tough year-earlier comparisons when accommodative monetary policies led to record levels of deals.
Banks could see further pain down the road, as the latest report from Wednesday showed inflation had accelerated again in June, likely adding more pressure on the Fed to raise its benchmark rate.
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