Morgan Stanley Continues String Of Earnings Misses

Morgan Stanley released the earnings results from its fourth fiscal quarter before opening bell, posting adjusted earnings of 40 cents per share on $7.8 billion in revenue. The report continues what has been a dismal round of fourth quarter earnings reports in the Financials sector. Analysts had been expecting the firm to post earnings of 56 cents per share on $8.42 billion in revenue for the quarter.

Morgan Stanley reports several items

The firm’s net earnings from continuing operations were 47 cents per share. Included in the net results are a $1.4 billion “discrete tax benefit,” which amounted to 70 cents per share. Morgan Stanley also reported higher compensation expenses due to $1.1 billion in deferral adjustments, which amounted to 40 cents per share.

The firm reported $284 million in legal expenses in connection with the legacy residential mortgage-related issues, which amounted to 12 cents per share. Also Morgan Stanley saw negative FVA revenues of $468 million, which amounted to 17 cents per share.

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Breaking down Morgan Stanley’s earnings report

The firm said its Investment Banking Division led the world in initial public offerings and was in second place in mergers and acquisitions.

Morgan Stanley also saw record quarterly revenue from its Wealth Management division, which was $3.8 billion. Pretax income from continuing operations in the division was $736 million, compared to last year’s $715 million. The firm also reported $21 billion in fee-based asset flows, another record.

Net revenues from the firm’s Institutional Securities division were $3.2 billion, while pretax losses from the division were $863 million, compared to last year’s $1.2 billion pretax loss. Investment Management net revenues were $588 million, while pretax losses from continuing operations were $6 million for the quarter. Assets under management or supervision were $403 billion during the quarter.

For the full year, net revenues were $34.3 billion, compared to the previous year’s $32.5 billion, and earnings were $2.96 per share, compared to $1.38 per share in the same quarter a year ago.

Shares of Morgan Stanley fell by as much as3% in premarket trading this morning.