Morgan Stanley Reports First Quarter Results Wednesday March 19, 7:30 am ET Net Revenues of $8.3 Billion Quarterly EPS of $1.45 and Annualized ROE of 20% Strong Trading Results with Record Revenues in Equities
NEW YORK--(BUSINESS WIRE)--Morgan Stanley (NYSE: MS - News) today reported income from continuing operations for the first quarter ended February 29, 2008 of $1,551 million, or $1.45 per diluted share, compared with $2,314 million, or $2.17 per diluted share, in the first quarter of last year. Net revenues were $8.3 billion, 17 percent below last year’s first quarter. Non-interest expenses of $6.1 billion, including severance expense of approximately $161 million related to staff reductions, decreased 7 percent from a year ago.1 The annualized return on average common equity from continuing operations was 19.7 percent in the current quarter, compared with 30.9 percent in the prior year. Net income for the quarter was $1,551 million, or $1.45 per diluted share, compared with net income of $2,672 million, or $2.51 per diluted share, in the first quarter of 2007. Net income for the first quarter of 2007 includes the results of Discover Financial Services and Quilter Holdings Ltd which are reported in discontinued operations. The annualized return on average common equity was 19.7 percent, compared with 29.9 percent a year ago.
Institutional Securities revenues were $6.2 billion, the third highest quarter ever. Equity sales and trading revenues were a record $3.3 billion, up 51 percent from last year’s first quarter, reflecting record results in both derivatives and prime brokerage. Fixed income sales and trading revenues were $2.9 billion, the second highest quarter ever. These results reflect record revenues in interest rate, credit & currency products and the second highest quarter ever for commodities, partly offset by mortgage proprietary trading net writedowns of approximately $1.2 billion. Other sales and trading included net losses of approximately $1.1 billion due primarily to the marking to market of loans as well as closed and pipeline commitments. Investment banking delivered solid revenues of $980 million, including advisory revenues of $444 million, up 19 percent from last year’s first quarter. Global Wealth Management achieved net revenues of $1.6 billion, up 6 percent from the first quarter of last year and a pre-tax margin of 16 percent. This business generated net new assets of $11 billion, the second highest on record and our eighth consecutive quarter of client inflows. Asset Management faced challenging market conditions with losses in real estate and incurred further losses related to securities issued by structured investment vehicles resulting in a pre-tax loss of $161 million. The division continued to expand its product offerings with the launch of 15 new products in the first quarter including nine in alternatives, four in