The earnings season for big banks is wrapping up, with Morgan Stanley reporting its third-quarter numbers on Wednesday morning. While there may not be any major surprises, the results already in from five other large lenders have set the tone.
Investment banking has been lackluster over the past year, and Morgan Stanley (ticker: MS) is likely to reflect that in its results. According to FactSet data, the bank is expected to see an 11% decline in profit to $2.2 billion, resulting in earnings of $1.31 per share on revenue of $13.2 billion for the third quarter.
The burning question for Wall Street is: when can we expect a turnaround? While the third-quarter results may not show a surge in activity, there is a glimmer of hope for next year. Morgan Stanley executives have expressed some optimism recently.
At the Barclays Global Financial Services Conference last month, Daniel Simkowitz, head of investment management at Morgan Stanley, stated, "I would say we are more confident now than at any time this year about an improved outlook for 2024." He even mentioned signs of a "sustainable recovery."
Meanwhile, Morgan Stanley's closest competitor, Goldman Sachs (GS), discussed a rebound in deal-making during a call with analysts on Tuesday.
The Future of Capital Markets and Banking Environment
"I can't tell you when the environment will get better, but I do believe that the capital markets and banking environment will improve in the coming years. History tells us that it doesn't stay closed for multiple years at a time," stated David Solomon, the chief executive at Goldman.
Leadership Transition in Morgan Stanley
Apart from Morgan Stanley's general business performance, Wall Street has its eyes on the bank's next leader. CEO James Gorman revealed his intention to step down within the next year, making the announcement in May. Alongside Simkowitz, co-presidents Ted Pick and Andy Saperstein, who respectively oversee capital markets and wealth management at the bank, are among the contenders for the position.
Third-Quarter Earnings Report
Morgan Stanley is the final major bank to report its third-quarter earnings. Despite facing a challenging macroeconomic backdrop, their results have exceeded analyst forecasts. Earlier, JPMorgan Chase (JPM), Bank of America (BAC), and Goldman Sachs all delivered strong performance.
Morgan Stanley has scheduled a call with analysts at 8:30 a.m. ET on Wednesday.