Morgan Stanley Posts Profit on Strong Investment Banking
Morgan Stanley (MS) posted a net $757m profit, or $0.38 per share, in Q309 -- its first quarterly profit in a year -- as a 74% increase in investment banking profit neutralized $400m in real estate-related losses. Net revenue was $8.7bn in Q309, up from $5.4bn in Q209. Year-to-date through Q309 income was $412m. Within its institutional securities unit, reduced losses on real estate-related investments contributed to investment gains of $37m, compared with losses of $390m in Q308. Morgan Stanley repurchased its US Treasury warrant related to the Troubled Asset Relief Program (TARP) for $950m, providing US taxpayers a 20% annualized return on their investment in Morgan Stanley, the company said. “We also saw improvements from the prior quarter in fixed income sales and trading, commodities, prime brokerage and our wealth management business,” outgoing chairman and CEO John Mack said. “Although we still have work to do in sales and trading, it offers our single biggest opportunity for growth as we build out our client flow business and pursue disciplined risk-taking.” Net revenue in the Morgan Stanley Smith Barney wealth management business unit was $3bn, up 91% from a year ago. Pre-tax income was $280m. Morgan Stanley completed the transaction acquiring a majority stake in Smith Barney from Citigroup during Q209. Write to Austin Kilgore.