Moody's affirmed its A3 senior debt ratings on Goldman Sachs Group Inc. and Morgan Stanley with a stable outlook.
The rating agency also affirmed Morgan Stanley Bank NA's A1 deposits rating, Morgan Stanley & Co. International Plc's A1 senior debt rating, Morgan Stanley Bank International Ltd.'s A1 deposits rating, and Morgan Stanley Bank AG's A1 deposits rating with a stable outlook.
Similarly, the agency affirmed Goldman's operating subsidiaries but changed the outlook to negative from stable. Goldman Sachs Bank USA's A1 deposits rating, Goldman Sachs International's A1 senior debt rating, and Goldman Sachs International Bank's A1 deposits rating were also affirmed.
For Goldman Sachs, the affirmation reflects its continued strong profitability and low earnings volatility. The unit's negative outlook is based on the above-average loan growth Goldman Sachs has witnessed over the past year, while the firm is also facing revenue challenges in its institutional client services business segment due to an extended period of low volatility in the global capital markets, Moody's said.
Morgan Stanley's rating reflects the credit positive benefits of recent and expected further improvements in its profitability, offset by the firm's rapid loan growth, greater susceptibility than peers to stress and Moody's expectation that the company will continue to return more capital to shareholders over the next few years, reducing the credit positive benefit of its capital ratios.
