MORGAN Stanley’s chief executive James Gorman yesterday admitted he was “not satisfied” with the bank’s performance in the third quarter, when it swung into the red due to a poor trading environment and a writedown on the planned disposal of casino operator Revel Entertainment.
Morgan Stanley posted a net loss of $0.07 per share, compared with net income of $0.38 per share in the third quarter of 2009, after taking a $229m hit on the disposal of Revel.
Income from continuing operations fell by two thirds to $313m, while net revenues came in at $6.8bn for the quarter – a fifth below the $8.5bn the bank raked in a year ago.
Morgan Stanley said its institutional securities arm had faltered over the period due to a slump in Wall Street activity, with revenues at the division almost halving since last year to $2.89bn. After bringing in $1.34bn of pre-tax income last year, profits at the division were all but wiped out to $240m in the third quarter of 2010.
The bank’s staff compensation pot for the quarter fell by a quarter due to the poor performance, falling from $4.9bn in 2009 to just $3.7bn this year. The decline “primarily reflected lower compensation costs in institutional securities”, the bank said.
Wealth management revenues remained broadly flat from last year at $3.1bn, while asset management performed better, swinging into the black on revenues that almost doubled to $802m.
“Although we continued to make progress across some key businesses, 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,” said Gorman, who took over from John Mack in January.