Morgan Stanleys asset management business reported a strong third quarter, while the overall company posted a drop in its net income from loan writedowns related to tightened credit markets.
Morgan Stanley reported $577 billion in assets under management for its fiscal quarter ended Aug. 31, a 3% increase from the previous quarter and a 25% increase from a year earlier. The increase came from solid net inflows during the quarter, company officials said during a conference call Sept. 19, as well as market appreciation. For the quarter, Morgan Stanleys asset management business had total net inflows of $20.8 billion, with institutional money market flows making up roughly 60%, or almost $13 billion, of the third-quarter increase. The inflows boosted Morgan Stanleys money market assets under management to $103 billion; alternative assets increased 16% while fixed income was flat during the quarter, and equity assets under management dropped 4%. The declines resulted from market depreciation and client outflows.
Overall, Morgan Stanley posted net income of $1.54 billion for the quarter, including the results of its Discover Financial Services unit which was spun off on June 30. Thats a 40% decline from the previous quarter and a 17% decrease from a year ago. Excluding Discover's contributions, net income was $1.47 billion, a 38% decline from the previous quarter and a 7% decrease from one year ago. Roughly $940 million of loan losses during the quarter contributed to the decline, while another $480 million of trading losses in quantitative strategies reduced income as well.