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| Morgan Stanley |
Shares of Morgan Stanley MS +4.38% rose about 3% at the opening bell.
For the quarter, Morgan Stanley’s profit was $968 million, or 50 cents a share, down from $1.78 billion, or 99 cents a share, in the year-earlier period. Net revenue fell 16% to $7.64 billion.
The latest quarter’s results included a pretax loss of $655 million due to the bank’s Japanese joint venture, Mitsubishi UFJ Morgan Stanley Securities Co. Ltd.
Analysts had expected Morgan Stanley to earn 42 cents a share on revenue of $7.88 billion, according to FactSet Research.
Revenue from Morgan Stanley’s institutional-securities business, which includes advising on corporate mergers and underwriting corporate stock and debt offerings, fell 33% to $3.59 billion.
The bank also said that its trading revenue declined 21% to $2.98 billion during the quarter. Much of that decline was due to a 33% fall in fixed-income sales and trading to $1.8 billion. Morgan Stanley said equity trading was $1.7 billion — its highest since 2008 — from $1.4 billion in the first quarter of 2010, while it also saw trading losses of $458 million, due largely to movements in its own debt.
“Morgan Stanley’s report is a bit anticlimactic following four other [Wall Street bank] reports that showed better-than-expected strength in trading,” said David Trone, head of U.S. banks and brokers research at JMP Securities.
Revenue from the company’s global wealth-management unit, which provides brokerage and investment advisory services to individual investors and businesses, was up 11% to $3.44 billion. Revenue from Morgan Stanley’s asset-management business, however, fell 4%, to $626 million.
Morgan Stanley also said compensation expenses fell $100 million, to $4.3 billion. The firm’s compensation-to-net-revenue ratio was 57% — 52% minus the Mitsubishi UFJ loss — up from 49% in the year-ago period.
So far this year, Morgan Stanley shares are down 1.4%. Rival banks have also seen declines, with Goldman Sachs Group Inc. GS +0.22% shares off 9.2%, Bank of America Corp. BAC 0.00% shares off 8% and Citigroup Inc. C -0.70% down 3.2% year-to-date. J.P. Morgan Chase & Co. JPM -0.88% , however, has seen its stock rise 5% in 2011.
Also Thursday, Mitsubishi UFJ Financial Group MTU -0.69% and Morgan Stanley said they have agreed to convert MUFG’s outstanding convertible preferred stock in Morgan Stanley into Morgan Stanley common stock. The deal will leave MUFG with ownership of 22.4% of Morgan Stanley.
