Morgan Stanley quarterly profit drops 59 pct


After several paltry years of returns outside management's preferred range of 9 percent to 11 percent, Morgan Stanley delivered ROE of 9.4 percent, excluding the impact of changes to tax legislation.

"Most of Morgan Stanley's tax hit came from deferred tax assets, which decline in value when corporate tax rates decline", Chief Financial Officer Jonathan Pruzan said in an interview on Thursday.

Morgan Stanley released fourth-quarter earnings Thursday, and, like the rest of the big Wall Street banks, it beat analyst expectations with adjusted earnings of $0.84 a share. Analysts on average were looking for 77 cents per share, according to Thomson Reuters I/B/E/S.

Morgan Stanley earned $686 million, or 29 cents a share, down from $1.67 billion, or 81 cents a share, from a year earlier.

Excluding the one-off charge and other items, adjusted profit was $1.68 billion, or 84 cents per share.

The firm took a charge of $990 million or 55 cents per share for a tax provision.

Total revenue rose 5 percent to $9.5 billion from $9.02 billion in the year-ago quarter. That division, which has been a top priority for the bank for years, reported a pre-tax profit of $1.2 billion compared with $891 million in the same period a year ago.

Former England footballer Cyrille Regis dies aged 59
Regis won five caps for England between 1982 and 1987, having been one of the stars of the Baggies team between 1977 and 1984. Regis, who retired from his playing career in 1996, was awarded an MBE in 2008 for his charity work and services to football.

Its longtime bet on the steady-as-she-goes business continues to bear fruit, assisted by a rising stock market that has lifted the value of client assets and respectively, the fees earned by the bank.

Morgan Stanley also notes that the new tax reform heavily hit its earnings for the fourth quarter of the year.

S. bank rose almost 2 percent to $56.40 in pre-market trade.

However, Morgan Stanley's biggest source of income, trading revenue, fell 19.5 percent to $2.25 billion.

It unveiled a fourth-quarter profit despite taking a $1.2 billion charge linked to the new USA tax law and suffering a plunge in trading revenue.

However, its Wealth Management performance helped negate some of that fall, rising 10.5% to $4.4 billion from $4.0 billion in Q4 2016. Investors had attributed a higher value to Goldman for about a decade but a collapse in trading revenue past year has hit the bank harder than its rival.

Morgan Stanley is also working to keep its efficiency ratio, which measures expenses relative to revenue, to less than 73 percent, down one percentage point from its prior target.