Morgan Stanley Wealth Management recorded net revenues of $6.6bn in Q1 2023, compared to $5.9bn a year ago.
Asset management revenues decreased year-on-year from $3.6bn to $3.4bn due to lower asset levels due to declines in the markets. However, this was partially offset by positive fee-based flows.
In addition, net interest income spiked in Q1 2023 from $1.5bn to $2.2bn. Pre-tax income of $1.7bn in the quarter resulted in a pre-tax margin of 26.1%.
Net new assets of $110bn were brought to the arm during the quarter. Results reflected higher net interest income versus prior year primarily driven by higher interest rates, even as clients continued to redeploy sweep deposits. The results were partially offset by an increase in expenses as well as higher provisions for credit losses.
Transactional revenues decreased 12% excluding the impact of mark-to-market gains on investments associated with certain employee deferred compensation plans. Also, fewer new issuance opportunities and reduced activity levels drove the decrease.
Morgan Stanley in Q1 2023
The group as a whole reported net revenues of $14.5bn for Q1 2023, a slight drop from $14.8bn in Q1 2022.
Furthermore, net income applicable to Morgan Stanley was $3bn compared to $3.7bn a year ago.
The firm also delivered a ROTCE of 16.9% and an expense efficiency ratio of 72%.
James P. Gorman, chairman and chief executive, said: “The Firm delivered strong results with a ROTCE of 17% in a very unusual environment, demonstrating the strength of our business model. The investments we have made in our Wealth Management business continue to bear fruit as we added a robust $110bn in net new assets this quarter. Equity and Fixed Income revenues were strong, although Investment Banking activity continued to be constrained. We maintained our strong capital levels and remain well positioned to provide long-term value to our shareholders.”