Morgan Stanley reported earnings Tuesday, announcing that third quarter net income slipped to US$1.4 billion from US$1.54 billion in the same quarter last year.

The firm said that income from continuing operations for the third quarter ended August 31, reached US$1.4 billion, compared with US$1.5 billion in the third quarter of last year. Net revenues were US$8 billion, up 1% from last year’s third quarter. The annualized return on average common equity from continuing operations was 16.5% in the current quarter, compared with 17.2% in the prior year.

For the first nine months of fiscal 2008, income from continuing operations was US$4 billion, compared with US$6.2 billion a year ago. Net revenues decreased 20% for the period.

“Despite unprecedented market conditions, Morgan Stanley’s core client franchise achieved solid revenue growth, profitability and ROE this quarter,” said John Mack, chairman and CEO. “Our people delivered particularly strong performance across our prime brokerage, commodities, foreign exchange and equities businesses, and we saw continued growth in our international business.”

“We have continued to actively reduce our legacy positions and carefully manage our risk, capital and liquidity. I am confident that Morgan Stanley’s strong balance sheet and product and geographic diversification leave us well-positioned to serve our clients and realize opportunities in these challenging markets,” Mack added.

IE