The US firm said its expense efficiency ratio was 74 per cent, affected by $200 million related to a specific regulatory matter concerning the use of unapproved personal devices and the firm’s recordkeeping requirements.

Pre-tax income at Morgan Stanley fell to $3.319 billion in the second quarter of 2022 from $4.566 billion a year ago, as net revenues fell and non-compensation costs rose, the US firm has reported. 

Net revenues fell to $13.132 billion from $14.759 billion; non-compensation expenses rose to $4.162 billion from $3.697 billion, it said in a statement.

The cost/income ratio rose to 74 per cent from 69 per cent over the year. The Wall Street firm said it had a standardized Common Equity Tier 1 capital ratio – a standard international yardstick of a bank’s capital buffer – of 15.2 per cent.

Within the wealth management business, this division delivered a pre-tax margin of 26.5 per cent or 28.2 per cent when integration costs are taken out. Net revenues were $5.7 billion, negatively impacted by mark-to-market losses on investments associated with certain employee deferred compensation plans. The business added net new assets of $53 billion in the quarter and $195 billion in the first half of 2022. The quarter also saw continued growth in bank lending and $29 billion of fee-based flows.

“Overall the firm delivered a solid quarter in what was a more volatile market environment than we have seen for some time. Strong results in equity and fixed income helped partially counter weaker investment banking activity. We continue to attract positive flows across our wealth management business, and investment management continues to benefit from its diversification. Finally, we finished the quarter in a strong capital position to ensure we move forward with confidence," James Gorman, chairman and chief executive, said.