Morgan Stanley has reported a net loss of US$177 million for the first quarter ended March 31, compared with net income of US$1.4 billion in the year-ago quarter.
Net revenues were US$3 billion, down 62% from last year’s first quarter, the company said Wednesday.
Non-interest expenses decreased 33% from a year ago. Compensation expenses decreased 46% from a year ago to US$2.1 billion, primarily reflecting lower revenues. Non-compensation expenses decreased 9%, reflecting lower levels of business activity and firm-wide initiatives to reduce costs. Headcount was reduced by 5% in the quarter.
The firm said its results were negatively impacted by the US$1.5 billion decrease in net revenues related to the tightening of credit spreads on certain of its long-term debt and net losses of US$1.0 billion on investments in real estate.
Investment banking had net revenues of US$0.8 billion. Fixed income sales and trading delivered net revenues of US$1.3 billion. Equity sales and trading recorded net revenues of US$0.9 billion reflecting lower net revenues in derivatives and the cash businesses, including prime brokerage. Global Wealth Management Group saw net revenues of US$1.3 billion.
“While challenging markets continued to impact our results this quarter, we saw improved performance across most of our businesses during the past three months. The firm delivered strong results in investment banking, commodities, interest rates and credit products as well as solid performance in global wealth management. In fact, Morgan Stanley would have been profitable this quarter if not for the dramatic improvement in our credit spreads – which is a significant positive development, but had a near-term negative impact on our revenues,” said John Mack, chairman and CEO.
“In this volatile environment, we have focused on prudent stewardship of our balance sheet, capital and risk profiles, as evidenced by our exceptional capital ratios. We have also moved quickly to realize attractive new opportunities including the creation of a new industry leader in wealth management with the Morgan Stanley Smith Barney joint venture as well as our new securities joint venture with MUFG. Although the near-term environment remains challenging, we remain confident about the value we can deliver to our clients and shareholders over the long term,” Mack added.
IE