Morgan Stanley Reports Fourth Quarter and Full Year 2012:
Fourth Quarter Net Revenues of $7.0 Billion Included the Negative Impact of $511 Million from the Tightening of Morgan Stanley's Debt-Related Credit Spreads (DVA);1 Income from Continuing Operations of $0.28 per Diluted Share
Excluding DVA, Fourth Quarter Net Revenues were $7.5 Billion and Income from Continuing Operations was $0.45 per Diluted Share2, 3
Fourth Quarter Global Wealth Management Pre-Tax Margin of 17%, Highest Since the Inception of the Joint Venture; Investment Banking Ranked #1 in Global IPOs and #2 in Global Announced M&A and Global Equity;4 Solid Results in Equity Sales and Trading
Full Year Net Revenues of $26.1 Billion Included the Negative Impact of $4.4 Billion from DVA; Loss from Continuing Operations of $0.03 per Diluted Share; Excluding DVA, Net Revenues were $30.5 Billion and Income from Continuing Operations was $1.59 per Diluted Share2, 3
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Introduction
Institutional Securities
Global Wealth Management Group
Asset Management
Full Year Results
Full Year Segments Results
Capital
Other Matters
Safe Harbor
Financial Supplement
INTRODUCTION
NEW YORK, January 18, 2013 – Morgan Stanley (NYSE: MS) today reported net revenues of $7.0 billion for the fourth quarter ended December 31, 2012 compared with $5.7 billion a year ago. For the current quarter, income from continuing operations applicable to Morgan Stanley was $573 million, or $0.28 per diluted share,5 which included a net tax benefit of approximately $155 million,6 or $0.08 per diluted share, compared with a loss of $222 million, or a loss of $0.13 per diluted share,5 for the same period a year ago. The prior year fourth quarter included a pre-tax loss of approximately $1.7 billion, or a loss of $0.58 per diluted share, related to the comprehensive settlement with MBIA Insurance Corporation (MBIA).
Results for the current quarter included negative revenue of $511 million compared with positive revenue of $216 million a year ago related to changes in Morgan Stanley's debt-related credit spreads and other credit factors (Debt Valuation Adjustment, DVA).1
Excluding DVA, net revenues for the current quarter were $7.5 billion compared with $5.5 billion a year ago and income from continuing operations applicable to Morgan Stanley was $894 million, or $0.45 per diluted share, compared with a loss of $349 million, or $0.20 loss per diluted share a year ago.3, 5, 7
Compensation expense of $3.6 billion in the current quarter declined from $3.8 billion a year ago. Non-compensation expenses of $2.5 billion increased from $2.3 billion a year ago.
For the current quarter, net income applicable to Morgan Stanley, including discontinued operations, was $0.25 per diluted share, compared with a net loss of $0.15 per diluted share in the fourth quarter of 2011. Discontinued operations in the current quarter includes a provision of approximately $115 million related to a settlement with the Federal Reserve Board concerning the independent foreclosure review related to Saxon.8