Morgan Stanley Reports 3rd Quarter Loss

Published by: Frank Galvano on 20th Oct 2010 | View all blogs by Frank Galvano

Morgan Stanley Reports 3rd Quarter Loss

Morgan Stanley released its third-quarter results on Wednesday, reporting a surprising $91 million loss on weak volumes during one of the worst trading quarters in recent memory. The report comes a day after Goldman Sachs reported a $1.9 billion profit, surpassing analysts' expectations, in the same tough conditions.

Morgan has fallen behind its arch rival Goldman since the onset of the financial crisis. The firm reported a loss in 2009, while Goldman cashed in on a number of windfall trading opportunities to eanr record-profits for the year. The two banks, the largest of the nation's investment banks have taken very different paths since the recession hit. Morgan Stanley has expanded its business to include the largest retail brokerage while Goldman Sachs has mainly stuck to its trading and banking roots.

Morgan Stanley officials acknowledge that there is an uphill battle ahead of them if they are to catch Goldman in fixed income trading, a key sector in the banking industry's recovery from the recession. The firm's fixed income net revenue for the third quarter was down more than 50 percent from the previous year.

Morgan Stanley's global wealth management business offered little to offset the firm's trading losses, reporting net revenue of $3.1 billion, just 1 percent higher than last year's third quarter. Income from continuing operations for the quarter came to just 5 cents per share, far short of analysts' expectations of 15 cents per share.

Shares of Morgan Stanley fell 77 cents, or 3 percent, to $24.62 in early trading on Wednesday.

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