On Friday, Morgan Stanley reported a 30 per cent drop in third-quarter profit as a slowdown in global dealmaking hurt the investment bank’s core underwriting business.

This year, the outlook for deals has steadily worsened as the US Federal Reserve hiked interest rates to curb inflation. Global M&A (mergers and acquisitions) lost ground for the third straight quarter, with volumes in the United States plunging nearly 63 per cent as the increasing cost of debt forced companies to delay big buyouts.

Investment banking revenue more than halved to USD 1.3 billion, with drops across the bank’s advisory, equity and fixed income segments.

Companies have also been postponing plans to go public amid depressed investor sentiment due to unrest in financial markets triggered by the Ukraine war and rapidly increasing borrowing costs.

Morgan Stanley’s net revenue in the quarter declined 12 per cent to USD 13 billion. The bank reported a profit of USD 2.49 billion, or USD 1.47 per share, for the quarter that ended September 30.

A profit of USD 1.49 per share and revenues of USD 13.3 billion were expected. It was not clear if the reported numbers were comparable with the estimates.

Morgan Stanley joins competitors JPMorgan Chase Co and Well Fargo & Co, which reported similar hits to their quarterly profit on Friday amid uncertain economic conditions that have led banks to build rainy-day funds.