GO
Loading...

Legal bills hit Morgan Stanley 4Q profit

Morgan Stanley reported a sharp fall in quarterly profit as the Wall Street bank was hit by $1.2 billion in legal bills, but adjusted earnings beat market estimates.

Net income from continuing operations applicable to the company fell to $192 million, or 7 cents per share, in the fourth quarter from $661 million, or 33 cents per share, in the same quarter of 2012, the bank said on Friday.

Excluding items that included the legal expenses, the bank earned 50 cents per share, according to Thomson Reuters, beating the average analyst estimate of 45 cents per share.

Net revenue from continuing operations rose 12.5 percent to $7.83 billion.

Morgan Stanley shares, which have risen 56 percent in past 12 months, were up before the opening bell. (Click here to track the company's shares following the report.)

Getty Images

``Importantly, we are continuing to address many of the legal issues from the financial crisis,'' Chief Executive James Gorman said in a statement.

Revenue from Morgan Stanley's wealth management business, which has become increasingly important as the bank moves away from risky trading activities, rose 12.2 percent from a year earlier to $3.73 billion.

The profit margin in the business was 20 percent, excluding an impairment charge, the highest since Gorman became CEO in 2010. Gorman has pledged to deliver returns of at least 20 percent.

However, the business has been underperforming major rivals on that measure. Bank of America's wealth business, for example, delivered a pretax margin of 26.6 percent in the latest quarter.

(Read more: BofA profit soars as loan-loss provision falls)

Morgan Stanley bought Citigroup's last remaining interest in the business in July and the unit's deposits are gradually being transferred.

Revenue from fixed-income trading fell 14.4 percent to $694 million. The bond market began to soften in the middle of the year as investors braced for the Federal Reserve to start scaling back its bond-buying stimulus and longer-term yields rose.

Goldman Sachs Group and Citigroup also reported weaker results from fixed-income trading in the latest quarter, while JPMorgan Chase and Bank of America produced higher revenue.

In other bank earninigs reports:
Goldman beats as trading revenue tumbles
Madoff penalties hit JPMorgan Chase profit
Citigroup earnings, revenue miss


By Reuters. CNBC contributed to this report.

Contact Earnings

  • CNBC NEWSLETTERS

    Get the best of CNBC in your inbox

    › Learn More