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Morgan Stanley Q1 profit plunges 54% with fall in trading revenue

BBR Staff Writer Published 19 April 2016

Morgan Stanley has reported a 54% drop in its profit for the first quarter this year, as its trading revenue was hit by weak sentiment in the markets.

Morgan stanley building

The New York-based financial services firm posted a net profit of $1.1bn for the March quarter compared to $2.4bn in the corresponding quarter a year earlier.

Net revenues of the firm fell to 7.8bn in the quarter from $9.9bn in the same quarter last year.

Morgan Stanley chairman and chief executive officer James P. Gorman said, "The first quarter was characterized by challenging market conditions and muted client activity. Against that backdrop, our businesses delivered stable results.

"While we see some signs of market recovery, global uncertainties continue to weigh on investor activity. We remain focused on executing against our priorities, helping client s navigate difficult markets while controlling our expenses and managing risk prudently."

Due to lower crude oil prices, its net revenue from fixed income and commodities sales and trading declined to $873m in the January-March quarter from $1.9bn in the first quarter of 2015.

"Results reflect lower commodities revenues given the depressed energy price environment and the disposition of the Oil Merchanting business in the fourth quarter of 2015. Results for the current quarter also reflect lower levels of client activity in rates and foreign exchange and a challenging credit environment," the company said in a statement.

Morgan Stanley witnessed an increase in its revenue from advisory services to $591m from $471m a year ago.

Its revenue from equity sales and trading fell slightly to $2.1bn from $2.3bn, as volality in global equity markets was partially offset by continued strength in prime brokerage.

Morgan Stanley's asset management fee revenue decreased slighly to $2.1bn , reflecting the impact of lower market levels, partly offset by positive flows.

Its revenue from investment management services decreased to $477m in the qaurter compared to $669m in the first quarter a year ago.

"Results for the current quarter reflect markdowns on investments and the reversal of previ ously accrued carried interest in certain private equity and real estate funds compared with gains in the prior year. Asset management fees were relatively unchanged year over year."


Image: Morgan Stanley's office on Times Square. Photo courtesy of Jenix89/Wikipedia.