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Morgan Stanley profit miscalculated as deals dry up – Reuters

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© Reuters. FILE PHOTO: The Morgan Stanley logo appears on the trading floor of the New York Stock Exchange (NYSE) in Manhattan, New York City, US, August 3, 2021. REUTERS/Andrew Kelly/File Photo

Written by Manya Saini and Carolina Mandel

(Reuters) – Morgan Stanley on Friday reported a 30 percent drop in third-quarter profit, below analyst estimates, as a slowdown in global dealmaking hurt the investment bank’s core underwriting business, sending its shares down 3.3 percent before the bell.

Prospects for deals have steadily worsened this year as the US Federal Reserve raised interest rates to tame inflation, clouding the outlook for economic growth, while record highs last year led to difficult comparisons.

“The company’s performance has been resilient and balanced in a challenging and uncertain environment,” said Chairman and CEO James Gorman, adding that its wealth management unit demonstrated scale and stability.

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Global mergers and acquisitions declined for the third consecutive quarter with volumes in the US down nearly 63% as the rising cost of debt forced companies to delay big purchases.

Investment banking revenue more than halved to $1.3 billion, with declines in the bank’s advisory, equity and fixed income segments.

The companies also delayed their plans to go public amid low investor sentiment due to turmoil in financial markets triggered by the Ukraine war and rapidly rising borrowing costs.

Chief Financial Officer Sharon Yeshaya told Reuters that for deal-making to rebound, the cost of capital and valuations must stabilize.

When asked about potential staff reductions amid the current challenging environment, she said the bank has been constantly evaluating its resources.

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Morgan Stanley (NYSE:) net revenue in the second quarter fell 12% to $13 billion. The bank reported earnings of $2.49 billion, or $1.47 per share, for the quarter ended September 30, compared with $3.58 billion, or $1.98 per share, a year earlier.

Analysts, on average, expected earnings of $1.49 per share and revenue of $13.3 billion, according to IBES Refinitiv data. It was not immediately clear whether the numbers reported were comparable with the estimates.

Morgan Stanley joins rivals JPMorgan Chase (NYSE) Co and Well Fargo & Co, which reported similar results to their quarterly earnings on Friday amid uncertain economic conditions that prompted banks to build rainforest funds.

The investment bank increased its provision for credit losses to $35 million from $24 million a year ago on the back of mounting fears of a recession in the United States.

Morgan Stanley’s wealth management business, which tends to generate steady income, was a surprising bright spot, reporting a 3% increase in revenue, buoyed by a 49% jump in net interest income amid higher federal funds rates.

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Economic

Coinbase says Apple blocked latest app release on wallet NFTs by Reuters

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© Reuters. FILE PHOTO: A representation of the cryptocurrency is seen in front of the Coinbase logo in this illustration taken March 4, 2022. REUTERS/Dado Ruvic/Illustration/File Photo

(Reuters) – Coinbase Global Inc said on Thursday that customers using Apple Inc’s (NASDAQ::) iOS will no longer be able to send non-fungible tokens (NFTs) to its wallet.

Coinbase (NASDAQ:) added in a tweet: “Apple’s claim is that gas fees required to send NFTs must be paid through an in-app purchase system, so they can charge you 30% of the gas fee.”

The 30% fee has been a point of contention between the world’s most valuable company and other app developers like Spotify (NYSE: ) and “Fortnite” maker Epic Games, which has accused the company of abusing its “monopoly.”

Apple did not immediately respond to a Reuters request for comment.

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UK regulator to investigate rising mobile phone and broadband prices

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The UK’s telecoms regulator has launched an investigation into whether telecoms companies were upfront with customers about price increases in a contract after complaints of a lack of transparency.

Ofcom will study whether mobile and broadband service providers made customers who signed a deal with the company between March 2021 and June 2022 sufficiently aware of changes to their pricing terms.

As inflation soared as the cost-of-living crisis intensified, telecom groups collapsed audit From the regulator and politicians about whether they acted enough to support struggling families and broke the rules of transparency. UK inflation hit a 41-year high of 11.1 percent in October.

Most operators chose to significantly increase their prices above the rate of inflation earlier this year, which boosted core revenue. For example, BT, Vodafone and EE raised their prices in line with the CPI, plus 3.9 percent.

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Ofcom He said he was concerned that such intra-contract price differences were not “sufficiently prominent or transparent” at the point of sale, as required by the regulator’s rules. If cases of non-compliance are identified, Ofcom may initiate an investigation into said operators.

said Lindsey Fossell, group director of regulator networks and communications.

Ofcom’s latest affordability report, published on Thursday, found that 32 per cent of households had problems paying for phone, broadband, pay TV or broadcast bills – more than double the level of April 2021.

It also found that 17 percent of households are currently cutting back on other spending, such as food and clothing, to afford telecom services — up from 4 percent in June 2021.

Dana Toback, chief executive of Hyperoptic, a broadband provider that chose not to raise its prices above inflation rates this year, said Ofcom’s investigation was “a huge step forward in preventing the consumer from harm caused by higher mid-price contracts”.

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This year’s Hyperoptic survey found that 60 percent of people were unaware that the price of their broadband would increase mid-decade.

“We work hard to make sure that the annual price increase is clearly defined and discussed at each registration or renewal,” said BT, which also owns EE, adding that the company also showed customers how price changes worked in the contract.

“We follow industry best practices, and will participate fully in the Ofcom programme,” she said.

Vodafone did not immediately respond to a request for comment.

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Georgieva of the International Monetary Fund to discuss the economy and Covid with Chinese authorities via Reuters

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© Reuters. International Monetary Fund Managing Director Kristalina Georgieva attends a press conference following a meeting at the Federal Chancellery in Berlin, Germany on November 29, 2022. REUTERS/Michel Tantosi

NEW YORK (Reuters) – International Monetary Fund Managing Director Kristalina Georgieva said on Thursday that she will travel to Beijing next week with heads of other international institutions to discuss China’s economic outlook and COVID-19 policies with the country’s leadership.

“This is the first time, and we hope we can sit down together and discuss the very pressing issues facing China and the world,” Georgieva told the upcoming Reuters conference.

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