Morgan Stanley Posts Sizeable Loss

Morgan Stanley reported on December 17, 2008 that their loss from continuing operations for the fourth quarter was $2,195 million compared with a loss of $3,588 million in the fourth quarter of last year. Net revenues were $1.8 billion, compared with negative $0.4 billion in last year’s fourth quarter.  Writedowns, impairments and losses decimated the revenue figures.  Non-interest expenses of $5.2 billion, including non-cash charges of $725 million related to the impairment of goodwill and intangible assets, decreased 3 percent from a year ago.

Income from continuing operations for the fiscal year ended November 30, 2008 was $1,807 million compared with $2,563 million a year ago.  Net revenues were $24.7 billion, 12 percent below last year. Non-interest expenses of $22.5 billion were 9 percent below 2007.  Net income for the year was $1,707 million compared with $3,209 million a year ago.  For the quarter, the net loss was $2,295 million compared with the net loss of $3,588 million in the fourth quarter of 2007. Net income for fiscal 2007 included the results of Discover Financial Services which are reported in discontinued operations. Costs in fiscal 2008 related to a legal settlement between Discover, Visa and MasterCard are also included in discontinued operations.

Even though this was the bank’s second loss in the last five quarters, highlights supplied by the Morgan Stanley press release include the following:

The firm delivered three straight quarters of profitability for the first nine months of the year and was profitable for the full year with net income of $1.7 billion and net revenues of $24.7 billion.

The firm substantially reduced its leverage and adjusted leverage ratios to 11.4x and 8.0x, respectively, from 32.6x and 17.6x at the end of fiscal 2007.

The firm strengthened its capital position – with a total of $24.7 billion in new Tier-1 capital.

Equity sales and trading delivered record net revenues of $10.0 billion, an increase of 10 percent from last year, reflecting record results in derivatives and strong results in the cash businesses.

Fixed income sales and trading net revenues of $3.9 billion included record revenues in commodities and foreign exchange, offset by lower revenues in other interest rate, credit & currency products (IRCC) and net mortgage related losses of $2.6 billion.

Investment banking delivered net revenues of $3.6 billion, despite the challenging market environment, and advised on some of the year’s biggest transactions including the year’s largest airline merger, largest media transaction and several of the largest rights issues by financial institutions.

Asset Management experienced a pre-tax loss of $1.8 billion, driven primarily by markdowns in principal investments and lower assets under management.

Global Wealth Management Group delivered strong results and generated return on average common equity of 48 percent and net new assets of $35 billion for the year with average annualized revenue per global representative of approximately $746,000.

This entry was posted on Friday, December 19th, 2008 at 4:30 pm and is filed under Money Rates. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.