(Reuters)

Morgan Stanley’s profit slipped 14 per cent in the second quarter from a year earlier as a dealmaking slump continued, while trading in stocks and bonds slumped.

Revenue from investment banking fell to US$1.16 billion. Trading revenues slid as volatility declined. Fixed income revenue sank 31 per cent while equities fell 14 per cent.

CEO James Gorman cited a “challenging market environment,” in the quarter, which “started with macroeconomic uncertainties and subdued client activity, but ended with a more constructive tone”.

The bank’s wealth management unit reported record net revenue of US$6.7 billion. Morgan Stanley has set a target to increase assets under management to US$10 trillion, it said in May, adding it was open to acquisitions.

Revenue from asset management slipped 2.0 per cent.

Excluding items, Morgan Stanley earned US$1.24 a share on a revenue of US$13.46 billion, comfortable beating estimates of US$1.15 a share on US$13.08 billion revenue, according to data from Refinitiv IBES.

The bank also set aside more provisions to prepare for souring loans, mainly because of weakening credit in the commercial real estate sector.

Shares of the investment bank fell 0.2 per cent in premarket trading.

Profit applicable to common shareholders fell to US$2.05 billion, or US$1.24 per diluted share, the bank said on Tuesday. That is down from US$2.39 billion, or US$1.39 per diluted share, a year earlier.