(Reuters) – Morgan Stanley reported an 11% drop in first-quarter profit on Thursday as equity underwriting revenue slumped from last year’s highs, taking some shine off a near doubling in M&A advisory fees.
The bank’s profit fell to $3.54 billion, or $2.02 per share, in the quarter ended March 31, from $3.98 billion, or $2.19 per share, a year earlier.
Analysts on average were expecting the bank to report a profit of $1.68 per share, according to Refinitiv data. It was not immediately clear if the reported numbers were comparable to estimates.
The Wall Street investment banking powerhouse said net revenue rose to $14.8 billion in the quarter from $15.72 billion.
During the first quarter, the largest U.S. investment banks faced turbulence stemming from Russia’s invasion of Ukraine, which unsettled equity markets and forced companies to hold off on dealmaking and stock market listings.
Like rivals Goldman Sachs and JPMorgan Chase, Morgan Stanley rode a dealmaking wave last year as businesses looked to raise capital and make M&A deals and the economy started to recover from the pandemic-induced downturn.
The total value of pending and completed deals amounted to about $900 billion by March 29, the lowest since the second quarter of 2020, according to Refinitiv data.
Equity underwriting deal volumes, too, fell 80% in the quarter for Morgan Stanley and Goldman Sachs, the two most dominant financial advisers on initial public offerings (IPOs) globally.
Morgan Stanley, however, reported a near doubling in advisory revenues, driven by higher levels of completed M&A transactions.
(Reporting by Noor Zainab Hussain in Bengaluru; Editing by Saumyadeb Chakrabarty)
