Morgan Stanley's third-quarter profit dropped less than expected as a strong performance in the bank's wealth management division offset a hit from lethargic dealmaking.
The wealth management business, which has been a bright spot for Morgan Stanley in recent quarters, has reduced the lender's reliance on trading and investment banking, which are largely tied to economic cycles.
"While the market environment remained mixed this quarter, the firm delivered solid results," CEO James Gorman said in a statement. "Our equity and fixed income businesses navigated markets well, and both wealth and investment management produced higher revenues."
Net revenue from wealth management rose nearly 5% to $6.4 billion, while its net new assets shrank to $35.7 billion from $64.8 billion a year earlier.
Morgan Stanley's profit dropped about 9% to $2.4 billion, or $1.38 per diluted share, for the three months ended September 30. Analysts had expected a figure of $1.28 per share, according to LSEG IBES data.
The bank's shares fell nearly 3% in premarket trading. Its results round out a largely upbeat reporting season for Wall Street's biggest banks, which benefited from rising income from interest payments.
Profit at rival Goldman Sachs dropped less than expected in the third quarter.
Total revenue from investment banking fell 27% to $938 million, as global mergers and acquisitions activity showed few signs of improvement.
Rising interest rates, antitrust scrutiny and an uncertain economic and geopolitical outlook have diminished companies' appetite to strike deals.
Lower activity took fixed income revenues down 11%. Equity revenues, however, inched up 2% driven by gains on investments.
Industrywide global investment banking fees fell almost 17% in the third quarter from the same period a year earlier, to $15.2 billion, according to data from Dealogic.
Markets could be further shaken by surging US Treasury yields that have knocked investor confidence.
Morgan Stanley also set aside $134 million in provisions for credit losses, surging from $35 million in the same quarter last year, driven by worsening conditions in commercial real estate.
