(27 July 2009 – USA) Morgan Stanley has missed the trend for second quarter profits by big American banks, with a loss of US$159 million ($A194.3 million) between April and June.The investment bank’s results are a significant drop on the US$698 million profit it made in the same period a year earlier, are the third consecutive loss for the bank and are worse than analysts had expected.
The results also are in stark contrast to key competitors, Goldman Sachs, as well as a number of other banks including JPMorgan. These banks not only managed a quarter of profit in the billions, but generally beat out analyst expectations.
Wells Fargo and Bank of New York Mellon were among those to announce that profits rose sharply between April and June. Net profit at Wells Fargo was US$3.17 billion, up 82 percent on last year.
Citigroup and Bank of America also saw profits for the quarter, albeit on the back of big once-off asset sales.
Morgan Stanley’s results included a US$850 million hit to repay US$10 billion received under the Troubled Asset Relief Program (TARP), something other banks completed without much of an impact to earnings.
The bank also saw an extra US$2.3 billion in charges from an improvement in the company’s own debt.
Roger Freeman, an analyst with Barclays Capital said that Morgan Stanley has slipped on the securities side because they haven’t stepped back into the game as aggressively as Goldman Sachs in equities and fixed income, and it’s showing in their results.
Morgan Stanley’s institutional securities business, which includes capital markets and investment banking, recorded a loss, with revenue declining 24 percent.