Morgan Stanley made last year a profit from operations of $48 million, down from strong gains of $4.2 billion in 2011, after major acquisitions. The net income fell to $26.1 billion from $32.2 billion last year. The investment bank’s results were affected by the impact of debt CDS. The financial result is equivalent to a loss of $0.03 per share. In the fourth quarter, Morgan Stanley earned a net profit of $507 million, or 25 cents per share, above expectations of analysts surveyed by Bloomberg, compared with a loss of $250 million in the same period of last year.
The quarterly revenue, excluding accounting adjustments, climbed to $7.48 billion from $5.46 billion, when the bank recorded a loss of $1.7 billion, related to an agreement related to a litigation with the bond insurer MBIA.
Chief Executive Officer of Morgan Stanley, James Gorman, applies a cost-cutting plan by eliminating jobs and benefit cuts, which fueled an increase of 28% of the bank’s stock price in the last two months. The compensation paid by the company was $711 million for 2012, down 4% from the previous year and almost 5,000 jobs were eliminated last year. Several other Wall Street banks use compensation cuts and layoffs to increase their profitability.
“After a year of significant challenges, Morgan Stanley has reached a pivot point,” Gorman said in a statement. “Our firm is now poised to reach the returns of which it is capable on behalf of our shareholders.” Gorman also stated that Morgan Stanley’s equity can reach 10%.
Joe Terril, president of Terril & Co, a St. Louis based money manager company believes that Morgan Stanley “gradually improves quarter after quarter.” He added: “I think Morgan Stanley has turned the corner.”
Investors are closely watching the wealth management division, an important part of the bank’s business that might offset the volatility of other areas such as investment banking and trading.
The stock of Morgan Stanley (NYSE:MS) went up 7.86% today on the New York Stock Exchange, closing at $22.38.
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