The US bank issued more than 12,000 structured products during a quarter in which it delivered ‘strong earnings’ despite the ‘typical summer slowdown and volatile markets,' according to James P. Gorman (pictured), chairman and chief executive officer.
Morgan Stanley reported net revenues of US$10 billion for the third quarter of 2019 compared with US$9.9 billion for the prior year quarter. Net income was US$2.2 billion, or US$1.27 per diluted share, compared with net income of US$2.1 billion, or US$1.17 per diluted share, for the same period a year ago.
The US investment bank issued 12,140 structured products between July 1 and September 30, according to SRP data. The products were sold across nine different jurisdictions and the vast majority (11,379 products) were listed flow and leverage certificates that were targeted at retail investors in Germany. Other European markets were the bank was active where France, Ireland and the UK, while in Asia it sold products in Hong Kong SAR, Japan and Taiwan.
The biggest market by sales volume was the US, where the bank collected US$1.45 billion from 479 products in the quarter, up 26% in sales volume compared to the same quarter last year but slightly down on the second quarter of 2019 (-6%).
Its products were distributed in the US via 10 different providers, including Advisors Asset Management (US$288m from 166 products), Goldman Sachs Private Banking (US$80m from seven products), Raymond James (US$49.5m from 42 products), and UBS Financial Services (US$167.5m from 24 products).
The best-selling structure in the quarter were the Trigger Plus Securities 61769Q196 which sold US$26.3m during the subscription period and was available via Morgan Stanley Wealth Management.
Institutional securities reported net revenues for the quarter of US$5 billion (3Q2018: US$4.9 billion) reflecting ‘strength’ across products, characterised by ‘strong client engagement’ despite seasonality and volatile markets, according to the bank.
Pre-tax income was U$1.3 billion compared with US$1.6 billion in the same quarter last year.
Equity sales and trading net revenues were unchanged from a year ago with lower revenues in the derivatives business being offset by solid performance across all other businesses while fixed income sales and trading net revenues increased 21% from a year ago reflecting strong client activity in the credit and rates businesses, partially offset by a decline in foreign exchange.
Other sales and trading net revenues increased from a year ago driven by lower costs from changes in funding mix and gains on economic hedges associated with corporate lending activity and certain of the firm’s borrowings.
Wealth management net revenues for the quarter, at US$4.4 billion were similar from a year ago. Pre-tax income of US$1.2 billion in the current quarter resulted in a pre-tax margin of 28.4%.
Investment management net revenues increased 17% reflecting strong carried interest and higher fee revenues. Assets under management exceeded US$500 billion.
Click the link to view the Morgan Stanley third quarter 2019 earnings results and financial supplement.