Morgan Stanley bucks profit trend
(27 April 2009 – USA) Morgan Stanley has bucked the trend of US banks beating expectations and turning to profit in 2009, with a first quarter loss of A$251 million.
Morgan Stanley reported a first quarter loss for the quarter ended March 31, 2009 of US$177 million (A$251 million), down from a profit of US$1.4 billion for the same time last year.
John J. Mack, Chairman and CEO, said, Morgan Stanley would have been profitable this quarter if not for the dramatic improvement in credit spreads. As the bank’s own debt has gained value, it was forced to recognise a loss of US$1.5 billion.
The quarterly loss is the second consecutive loss for the bank, though down considerably on the massive US$10.8 billion loss recorded last quarter.
Both revenue and expenses were generally down, though revenues were down by a significantly greater amount. Net revenues were US$3.0 billion, 62 percent below last year's first quarter while non-interest expenses of US$3.9 billion decreased 33 percent.
Morgan Stanley’s Asset Management unit was the big loser for the quarter, down US$418 million, while all other units were up, albeit only just.
The bank said that the results were negatively impacted by the US$1.5 billion decrease in revenue related to the tightening of credit spreads on long-term debt and losses of US$1.0 billion on investments in real estate, amidst the industry-wide decline in this market.
The Institutional Securities segment, which recorded a revenue loss of US$13.7 billion last quarter, saw the biggest turnaround, to positive revenue of US$1.7 billion and a profit of US$167 million for the quarter.
John J. Mack, Chairman and CEO, said, Morgan Stanley would have been profitable this quarter if not for the dramatic improvement in credit spreads. As the bank’s own debt has gained value, it was forced to recognise a loss of US$1.5 billion.
The quarterly loss is the second consecutive loss for the bank, though down considerably on the massive US$10.8 billion loss recorded last quarter.
Both revenue and expenses were generally down, though revenues were down by a significantly greater amount. Net revenues were US$3.0 billion, 62 percent below last year's first quarter while non-interest expenses of US$3.9 billion decreased 33 percent.
Morgan Stanley’s Asset Management unit was the big loser for the quarter, down US$418 million, while all other units were up, albeit only just.
The bank said that the results were negatively impacted by the US$1.5 billion decrease in revenue related to the tightening of credit spreads on long-term debt and losses of US$1.0 billion on investments in real estate, amidst the industry-wide decline in this market.
The Institutional Securities segment, which recorded a revenue loss of US$13.7 billion last quarter, saw the biggest turnaround, to positive revenue of US$1.7 billion and a profit of US$167 million for the quarter.
Subscribe