Morgan Stanley profit falls 42% after trading sales drop

Morgan Stanley Image copyright Reuters

Profits for US investment bank Morgan Stanley slumped in the third quarter as revenues for commodity, bond and foreign exchange trading fell.

Net profit fell 42%, to $939m (£607m), from $1.63bn for the same three-month period a year ago, the bank's second consecutive quarterly drop.

Net sales fell 13% to $7.77bn, missing analyst estimates of $8.5bn

Rivals Goldman Sachs, Citigroup, Bank of America and JPMorgan Chase have all reported dips in trading revenue.

During the three months to the end of September oil prices slumped and investors speculated over when the Federal Reserve will raise rates. It was also the time the Chinese stock market collapsed in value - from trading higher than 5,000 in June to below 3,000 in August.

Shares fall

Stocks and shares sales and trading was almost unchanged from a year ago, at $1.87bn

The shares were down 4.9% in premarket trading.

"The volatility in global markets in the third quarter led to a difficult environment, impacting in particular our fixed income business and our Asia merchant banking business," chief executive James Gorman said.

Earlier this month, the International Monetary Fund downgraded its forecast for global economic growth for 2015 to 3.1% from the 3.3% it predicted in July. The 2016 forecast is down to 3.6% from 3.8%.

Last week, rival banking giant Goldman Sachs reported a sharp fall in profits as its trading activity stalled.

Goldman's quarterly profits were $1.43bn, down more than a third on a year earlier.

The results contrasted sharply with those of Citigroup, which posted a 50% jump in profits, to $4.29bn.

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