Morgan Stanley posts 3Q loss on special charges

Morgan Stanley became the latest investment bank to report weaker results on Wednesday from a trading slowdown during the summer.

The New York-based bank reported a net loss during the third quarter as revenue fell 20 per cent and because of some special one-time charges.

Even stripping out the charges, adjusted earnings tumbled from the year-ago period.

Morgan Stanley's CEO James Gorman said in a statement: "Our results in aggregate clearly do not reflect the true potential of Morgan Stanley's global client franchise and I am not satisfied with our overall performance."

Morgan Stanley was hurt, like competitors Goldman Sachs Group and JPMorgan Chase, as customers significantly ratcheted back on investing

Morgan Stanley's revenue fell 20 per cent to US$6.8 billion, but that was still ahead of the US$6.4 billion forecast by analysts polled by Thomson Reuters.

The bank's net loss applicable to common shareholders was US$91 million, or 7 cents per share, during the quarter, compared with earnings of US$498 million, or 38 cents per share, during the same quarter last year.

Morgan Stanley would have earned a profit of 23 cents per share if it wasn't for special charges.

One of the biggest drivers of the loss was a US$731-million charge it took to reflect the greater cost it would incur to repurchase outstanding debt, which is worth more now because of the bank's improving financial condition.

That reduced earnings by 30 cents per share.

The New York-based investment bank was on the brink of collapse during the depths of the financial crisis in late 2008. As the company received new investments and expanded its retail brokerage business through the purchase of Smith Barney, it recovered. With that recovery, the price of its debt rose.

Morgan Stanley also took a US$229-million charge as it cut the value of its investment in Revel Entertainment Group, an Alantic City, New Jersey casino operator it plans to sell.

- AP