Sharon Yeshaya
Chief Financial Officer at Morgan Stanley
Thank you, and good morning. The firm produced revenues of $13 billion in the quarter. Our EPS was $1.47, and our ROTCE was 14.6%. Excluding integration-related expenses, our EPS was $1.53, and our ROTCE was 15.2%. We built our business model to perform through the cycle and withstand volatile environments, evidenced again by the performance this quarter. In Institutional Securities, fixed income benefited from macroeconomic developments, and in Wealth Management, we continue to attract strong net new assets, underscoring the benefits of an advice-driven model and a variety of backdrops.
The firm's year-to-date efficiency ratio was 72%. Excluding integration-related expenses, our year-to-date efficiency ratio was 71%, ensuring future growth remains a priority, and we continue to invest in tech-driven efficiencies. And with the abatement of COVID-related restrictions, marketing and business development expenses have progressively normalized as our teams reengage with clients and our colleagues in person. Efficiency remains an important performance objective and we review incremental spend on an ongoing basis.
Now to the businesses. Institutional Securities revenues were $5.8 billion, down from the robust prior year, but seasonally strong for -- seasonally strong rather, for a seasonally slower quarter relative to historical levels. Strength in fixed income and equities was a counterbalance to muted activity in Investment Banking.
Investment Banking revenues decreased year-over-year to $1.3 billion with meaningful declines across products, particularly underwriting. Ongoing market volatility continued to weigh on issuance and led clients to delay strategic actions. Advisory revenues were $693 million. Solid results reflected the completion of previously announced strategic transactions. Revenues were down relative to the record prior year and in line with broader M&A market volumes.
Equity underwriting revenues were $218 million, with year-over-year declines across products, reflecting the overall volatility in global equity markets. Fixed income underwriting revenues were $366 million. Investment grade issuance fared better. Issuers took advantage of favorable windows, and investors demonstrated selectivity in a more challenging market.
We remain engaged with clients, and strategic dialogues are active across multiple industry groups. The eventual conversion to announcements is dependent on clarity around macroeconomic conditions, including inflation, growth and geopolitics as well as the stabilization of valuation. Equity revenues were $2.5 billion. The business performed well against the backdrop of equity market declines and volatility.
Prime brokerage revenues decreased from last year. Results were impacted by lower average balances, reflective of client deleveraging, which was partially offset by the mix of client balances. Cash and derivative results declined versus the prior year as client activity moderated. Fixed income revenues of $2.2 billion represented the highest third quarter in over a decade, driven by strength across the macro complex. Macro revenues increased meaningfully versus the prior period. Inflationary pressure as well as central bank and fiscal activity drove volatility higher. By extension, changes in portfolios supported client engagement and increased flow trading activity, benefiting rates and foreign exchange.
Micro revenues were in line with the prior year. Revenues favored the Americas more in the current period. Other revenues declined from the prior year and reflected a loss of $100 million. Mark-to-market losses on event and relationship loans, net of hedges and movements in revenues related to deferred cash-based compensation contributed to the decrease.
Turning to Wealth Management. The business continues to deliver strong results despite the economic uncertainty. Revenues increased from the prior year to a robust $6.1 billion as we continue to grow the more stable parts of our firm. The rising rate environment supported net interest income, more than offsetting the lower asset management and transactional revenues. Pre-tax profit was $1.6 billion, and the PBT margin was 26.9%. Excluding integration-related expenses, the PBT margin reached 28.4%, underscoring the resiliency of this business against the backdrop of declining asset values.
Total net new assets were $65 billion in the quarter, bringing year-to-date net new assets to $260 billion. Asset consolidation from existing clients, net new clients, workplace relationships and positive net recruiting were all sources of strength. The growth of net new assets highlights the value of trusted advice, especially through periods of market uncertainty. Our platform continues to attract advisers to recognize the integral role of the Wealth Management business at the firm, and the value advisers gain by leveraging our technology and our products to best serve their clients.
Transactional revenues of $616 million, declined from the prior period, due to lower retail engagement and the impact of movements in revenues related to deferred compensation plans. Asset management revenues of $3.4 billion, primarily reflected lower market levels. Fee-based flows were $17 billion, moderating from the robust levels seen in recent quarters, suggesting retail hesitancy to invest in managed products in uncertain markets.
Bank lending balances grew to $146 billion. And on a year-to-date basis, balances have grown by $16 billion -- on a year-to-date basis, rather this quarter balances have grown by $16 billion. The pace of loan growth slowed this quarter on the back of paydowns in securities-based lending and moderating mortgage growth. Total deposits declined by 2% in the quarter to $332 billion. There was a shift in mix to higher-yielding saving products as our expanded bank offering attracted clients' investable cash.
Net interest income was $2 billion, up nearly 50% from the prior year. In this accelerated rate hike cycle, we have outperformed our modeled beta across our deposit portfolio, which has more than offset the changing mix of our deposit base. Through the end of the year, we would expect NII to remain broadly in line with the guidance provided last quarter, noting that some of the rate benefit was pulled forward into the third quarter. Despite this period of heightened uncertainty and volatility, we achieved consistent growth in Wealth Management. We continue to deliver strong net new assets and demonstrate economies of scale with considerable growth opportunities ahead.
Turning to Investment Management. Revenues of $1.2 billion, declined from the prior period, substantially driven by lower asset values as well as the impact of outflows over the last year. Total AUM ended at $1.3 trillion. Long-term flows were approximately $2 billion. While equity strategies continue to see outflows, the pace has moderated from recent quarters. Interest rate volatility negatively impacted fixed income flows.
However, our broadened portfolio also delivered offsets. Inflows of $7 billion into our alternative and solutions platform were led by continued demand for Parametric customized portfolios and our direct indexing and tax-efficient investing capabilities as well as continued demand for private credit.
Liquidity and overlay services had outflows of $32 billion. Clients likely relocated money market holdings to alternative risk-free assets. Asset management and related fees were $1.3 billion. The impact of lower average AUM led to the year-over-year decline. Performance-based income and other revenues were a net loss of $101 million, primarily driven by the markdown of a single underlying public investment in one of our Asia private equity funds.
Investments in the business and the integration of Eaton Vance continue to progress well. We are investing in products and vehicles that will allow us to deliver solutions to a broader set of clients. Our strategic focus on secular growth areas such as alternatives and direct indexing, supported by our ability to globally distribute products, positions us well to perform through the cycle.
Turning to the balance sheet. Standardized RWAs were relatively flat, ending the quarter at $460 billion. Prudent management of resources was partially offset by an increase due to market volatility. During the third quarter, we also bought back $2.6 billion of stock, taking advantage of our current valuation and utilizing the flexibility of our repurchase authorization.
OCI related to our available-for-sale securities portfolio reflected unrealized losses of $1.3 billion. While this should be earned back over time, it reduced our CET1 ratio by approximately 30 basis points in the quarter. Our standardized CET1 ratio was 14.8%, approximately 150 basis points above our regulatory requirement inclusive of buffers as of October 1st. Capital remains critical to our strategy, particularly in this rapidly evolving backdrop. Our tax rate was 21.4% for the quarter, down from the third quarter of last year, primarily driven by the realization of certain tax benefits. We now expect that our full year '22 tax rate will be approximately 22%.
Looking ahead, the broader economic outlook remains uncertain. While we cannot be sure how the market dynamics will play out, we remain confident in our strategy, particularly our ability to aggregate client assets in Wealth Management, support our institutional clients and deliver diversified solutions in Investment Management, all while prudently managing our capital profile and focusing on our strategic goals.
With that, we will now open up the line to questions.
