Morgan Stanley (MS: Quote) on Thursday reported a loss for the fourth quarter, reflecting a $1.7 billion settlement with bond insurer MBIA Inc. (MBI) to resolve lawsuits related to credit default swaps and a 40 percent drop in investment banking revenues. However, the investment banking giant reported an increase in trading revenues. The stock rose almost 6 percent in pre-market trading.
The company's fourth-quarter net loss was $275 million or $0.15 per share compared to net income of $600 million or $0.41 per share in the year-ago period.
Loss from continuing operations was $227 million or $0.14 per share and includes the loss related to MBIA of $1.7 billion or $0.59 per share. This compared with income of $871 million or $0.44 per share in the prior-year quarter.
On average, 24 analysts polled by Thomson Reuters expected the company to report a loss of $0.57 per share. Analysts' estimates typically exclude special items.
Net revenues for the quarter declined 26 percent to $5.71 billion, including the settlement, from $7.74 billion in the same period last year. Analysts had a consensus estimate of $5.57 billion.
Debt valuation adjustment or DVA resulted in positive revenue of $216 million in the quarter, compared with negative revenue of $945 million in the same period last year.
Investment banking revenues dropped 40 percent to $1.05 billion from $1.76 billion last year. However, the company grew its trading revenues by 13 percent to $969 million in the quarter. Revenues from commissions and fees dropped 12 percent to $1.16 billion.
Revenues from asset management, distribution and administration fees declined 2 percent to $2.03 billion.
Assets under management or supervision at December 31, 2011 were $287 billion, up from $272 billion a year ago.
For fiscal year 2011, Morgan Stanley's net earnings declined to $2.07 billion or $1.23 per share from $3.59 billion or $2.63 per share last year.
Earnings from continuing operations were $4.16 billion or $1.26 per share, down from $4.48 billion or $2.45 per share a year ago. Analysts expected earnings of $0.82 per share.
Net revenues rose 3 percent to $32.40 billion from $31.39 billion last year. Analysts had a consensus estimate of $32.51 billion.
Net revenues for the year include positive impact of $3.7 billion or $1.34 per share from the widening of Morgan Stanley's debt-related credit spreads.
The company's board of directors declared a quarterly dividend of $0.05 per common share, payable on February 15 to common shareholders of record on January 31.
MS closed Wednesday's trading at $17.35, up $1.10 on 37.18 million shares. In Thursday's pre-market, the stock is adding $1.04 or 5.99 percent to $18.39. In the past 52 weeks, the company's shares have traded in a wide range between $11.58 and $31.04.
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by RTT Staff Writer
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