MORGAN Stanley sank into the red at the end of last year, losing 15 cents per share in the fourth quarter and delivering dismal shareholder returns of just 3.9 per cent for the whole of 2011.
The bank was hammered by a series of hefty one-off charges and a collapse in underwriting revenues at the end of the year, which fell by more than half compared to the fourth quarter of 2010.
Like its rivals’, Morgan Stanley’s equities business was hit particularly hard as investors tried to sit out the crisis and trading volumes shrank. Revenues from underwriting in equities in the fourth quarter plunged by 71 per cent and were down 22 per cent for the year to $1.1bn.
Fixed income underwriting volumes were, by contrast, little changed for the year, although they fell 22 per cent in the fourth quarter compared to a particularly busy period in 2010 that had seen issuers rush to sell high-yield debt.
The bank posted a full-year pre-tax profit of $1.25 per share, but that was less than half of 2010 earnings.
Despite its end-of-year slowdown, the bank let its payroll expenses rise – unlike its rivals. Pay costs rose three per cent last year to $16.4bn, but have yet to reflect a new round of lay-offs begun this month.