Morgan Stanley's profits plummeted as M&A bankers underperformed
It's been a tough first quarter for M&A bankers. All of the major banks to report their first quarter earnings so far have seen big drops in M&A revenues compared to the first quarter of 2022. The bank to take the biggest hit so far is Morgan Stanley.
Morgan Stanley's institutional clients group, which houses its investment bank, saw all its major revenue lines fall year-on-year in Q1, but it was M&A that took the biggest hit, falling 32%. Morgan Stanley blamed the decline on a (self-evident) reduced volume of transactions compared to the same quarter last year.
As revenues in the institutional clients group fell, profits fell by even more. Net profits in the institutional clients group were down a third in the first quarter.
Pay took a hit across the investment bank as a result. Spending on compensation at the unit fell 9% year-on-year.
Morgan Stanley said falling spending on pay was in line with declining revenues, but that it was "offset by higher expenses related to stock-based compensation plans and certain deferred compensation plans linked to investment performance."
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