Morgan Stanley (MS) 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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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.