(Reuters) – Morgan Stanley (MS.N) posted a 32% fall in quarterly profit on Thursday as the coronavirus pandemic stalled dealmaking and warned that the crisis would continue to weigh on its operations in the coming months.

The results capped first-quarter earnings from big U.S. banks, which reported significant declines in profit and set aside billions to cover for a wave of expected loan defaults due to the crisis that has left millions of people jobless and companies cash-strapped.

Morgan Stanley differs from most of the other big six U.S. banks because it does not have large book of consumer loans and credit card business like JPMorgan Chase (JPM.N), or significant balance sheet investments like those of rival Goldman Sachs (GS.N).

Morgan Stanley’s wealth management unit, which contributes roughly half to its total revenue, fell 8% to $4.04 billion, as it bore the brunt of the ongoing turmoil in financial markets.

The wealth business, which the bank has relied on as a reliable source of revenue during periods of market volatility, reported a pre-tax margin of 26.1%, below the bank’s target range of 28-30%.

“Over the past two months, we have witnessed more market volatility, uncertainty and anxiety as a result of the devastating COVID-19 than at any time since the financial crisis,” said Chief Executive Officer James Gorman, who recently recovered from COVID-19, the disease caused by coronavirus.

Advisory revenue fell 11% as dealmaking took a beating in the quarter, with businesses bracing for a massive slowdown in the coming months.

Morgan Stanley’s $13-billion deal to buy discount brokerage E*Trade Financial Corp was one of few big-ticket acquisitions in a quarter which saw deal activity fall off a cliff.

However, the timing of the deal coinciding with the spread of the coronavirus means Gorman now faces the prospect of justifying the buyout to investors.

The bank’s trading desks were a bright spot with a 30% surge in revenue, boosted by wild swings in markets during the quarter. This was led by a 29% jump in bond trading and a 20% rise in equities.

Morgan Stanley’s robust performance in trading mirrored a similar showing from bigger rivals Goldman Sachs (GS.N) and JPMorgan (JPM.N), both of which clocked double-digit growth in equities and bond trading.

Investment management revenue at Morgan Stanley fell 14% to $692 million, hurt by valuation markdowns on its investment portfolio and lower interest on loans.

“While it’s too early to predict how this will unfold, Morgan Stanley navigated the quarter well given the conditions,” Gorman said.

The bank said earnings attributable to common shareholders fell to $1.59 billion, or $1.01 per share, in the first quarter ended March 31, from $2.34 billion, or $1.39 per share, a year ago.

Analysts had expected a profit of $1.14 per share, according to IBES data from Refinitiv.

Reporting by Bharath Manjesh in Bengaluru and Elizabeth Dilts Marshall in New York; Editing by Saumyadeb Chakrabarty

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