Economy

Morgan Stanley quarterly profit drops 59 pct

Morgan Stanley quarterly profit drops 59 pct

Morgan Stanley wrapped up earnings season for the big US banks with a better-than-expected profit, sending its shares up 1.43 percent in premarket trading.

Morgan Stanley's earnings fell 59 percent in the fourth quarter, the company said Thursday, as the investment bank had to book $990 million in charges related to the new tax law.

Analysts on average were looking for 77 cents per share, according to Thomson Reuters I/B/E/S.

Like other banks, Morgan Stanley had to write down the value of its deferred tax assets, which are effectively tax credits the bank stockpiled after the financial crisis.

President Donald Trump signed a bill last month that slashed the corporate tax rate to 21 percent from 35 percent.

Morgan Stanley's full year net revenues were $37.9 billion, up from $34.6 billion a year ago.

Tax overhaul charges have crimped fourth-quarter results for most big banks. Morgan Stanley's one-time $1.2 billion tax provision, however, was the smallest.

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Bullish global economic signals and gains for Morgan Stanley drove a rise in USA stock futures on Thursday, a day after the Dow extended a new year rally to close above 26,000 for the first time.

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. "In 2017, pre-tax earnings grew by 18%, driven by a 10% increase in revenues, with growth across all our business segments", CEO James Gorman said.

Trading revenue, which is traditionally Morgan Stanley's biggest source of income, fell 19.5 percent to $2.25 billion.

However, like Goldman Sachs earnings showed Wednesday, Morgan Stanley's trading revenues were disappointing. Stock trading, where Morgan Stanley is strongest, had steady revenue from a year ago.

Morgan Stanley's fourth quarter profit was 59% lower than the same period in 2016 following a one-off United States tax repatriation payment.

Wall Street was set to open slightly lower on Thursday, a day after the Dow extended a new year rally to close above 26,000 for the first time.


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