Morgan Stanley Earnings Come Up Short

Morgan Stanley third-quarter earnings
Morgan Stanley third-quarter earnings

Morgan Stanley (MS) posted a third-quarter net loss Wednesday, hurt by special charges and declines in sales and trading activity in a market that's been low on volume for months. On an adjusted basis, the world's biggest brokerage missed Wall Street's forecast.

For the three months ended Sept. 30, Morgan Stanley swung to a net loss applicable to common shareholders of $91 million, or 7 cents per share. That compares with year-ago earnings of $498 million, or 38 cents per share.

After factoring out special items related to buying back debt and writing down an investment, Morgan Stanley recorded earnings of $313 million, or 5 cents a share. Analysts, on average, forecast earnings of 15 cents a share, according to data from Thomson Reuters.

Third-quarter revenue fell to $6.78 billion from $8.45 billion a year ago, which topped analysts' average estimate of $6.44 billion.

"I Am Not Satisfied"

Morgan Stanley took a charge of $229 million partly due to cutting the carrying value of the firm's investment in casino company Revel Entertainment Group.

"Although we continued to make progress across some key businesses this quarter, our results in aggregate clearly do not reflect the true potential of Morgan Stanley's global client franchise and I am not satisfied with our overall performance," Chief Executive James Gorman said in a statement.

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Morgan Stanley's institutional securities division saw revenues decline 36% to $2.9 billion. Net income plunged 93% to $98 million.

Months of low market volume and subdued volatility have taken a toll on bank results this earnings season. Morgan Stanley's chief rival, Goldman Sachs (GS), reported sharp declines in third-quarter earnings and revenue on Oct. 19, hurt by slower trading activity over the summer, but its profits still easily exceeded analysts' average forecast. Dow component Bank of America (BAC), the nation's largest bank by assets, also missed Street revenue estimates.

Citigroup (C) on Oct. 18 likewise posted third-quarter revenue that was short of Street estimates. And Dow component JPMorgan Chase (JPM) last week reported disappointing third-quarter revenue, hurt partly by a drop in fees from underwriting stocks, bonds and advising on deals.