Morgan Stanley surprises in Asian investment banking
How on earth, in this environment, did the bank deliver one of its best-ever quarters in Asia?
Here is a statistic you might have missed. Morgan Stanley’s first-quarter results for the year to March 31, featured the bank’s third-best quarter from Asia – ever.
That’s right. In this dismal environment, with capital markets activity stymied by rising rates, inflation and feeble risk tolerance, a US investment bank delivered a quarter of earnings that has only ever been beaten twice, through years and years of boom markets.
Your next question: how?
Morgan Stanley breaks down revenues by region – Asia delivered $1.989 billion in the first quarter, up 40% on the fourth quarter of 2022 – but doesn’t go any further from that. The earnings call did, however, give us some insights into what went right.
Going so right
Sharon Yeshaya, chief financial officer, referred to “strength in areas of both fixed income and equity, aided by the policy dynamics in Japan and the China reopening.”
Chief executive James Gorman then referred to growth in private banking in Asia, and then Yeshaya put more meat on the bones following an incredulous question from Wells Fargo analyst Mike Mayo (“What is going so right in Asia that it’s your third-best quarter in an environment like this?”)
Yeshaya then referred again to China reopening, “supporting us from the equities side and perspective in terms of client engagement.”