Summary
Morgan Stanley's third quarter 2012 report shows a net loss of $1.023 billion applicable to Morgan Stanley, a significant deterioration from the $2.199 billion net income in the prior year period. This loss was driven by a substantial decline in net revenues, primarily due to negative revenue of $2.262 billion related to the tightening of the company's debt-related credit spreads on fair-valued borrowings, a factor commonly referred to as Debt Valuation Adjustment (DVA). Excluding this DVA impact, net revenues would have been higher, and the company would have reported a profit. The Institutional Securities segment experienced a significant loss before taxes, largely due to these DVA impacts and increased litigation expenses. Despite the overall net loss, the Global Wealth Management Group showed resilience with stable net revenues and a slight increase in assets under management, demonstrating the stability of this segment. The company also made strategic progress, including increasing its stake in the Wealth Management Joint Venture with Citi. Management highlights that excluding the DVA impact, the company's performance would have been considerably stronger, indicating a focus on the underlying business operations.
Financial Highlights
40 data points| Revenue | $5.28B |
| Operating Income | -$525.00M |
| Interest Expense | $1.53B |
| Net Income | -$1.02B |
| EPS (Basic) | $-0.55 |
| EPS (Diluted) | $-0.55 |
| Shares Outstanding (Basic) | 1.89B |
| Shares Outstanding (Diluted) | 1.89B |
Key Highlights
- 1Morgan Stanley reported a net loss of $1.023 billion ($0.55 per diluted share) for the third quarter of 2012, a significant decline from a net income of $2.199 billion ($1.15 per diluted share) in the same period of 2011.
- 2Net revenues for the quarter decreased to $5.289 billion from $9.810 billion in the prior year period.
- 3The company experienced a significant negative revenue impact of $2.262 billion related to Debt Valuation Adjustment (DVA) on its fair-valued borrowings, contributing significantly to the reported loss.
- 4Excluding the DVA impact, net revenues for the quarter would have been $7.551 billion, and diluted EPS from continuing operations would have been $0.28 per share.
- 5The Institutional Securities segment reported a pre-tax loss of $1.917 billion, heavily influenced by DVA and increased litigation expenses.
- 6The Global Wealth Management Group maintained stable net revenues at $3.336 billion and saw a rise in total client assets to $1.768 trillion.
- 7The company increased its stake in the Wealth Management Joint Venture with Citi to 65% and completed the rebranding of its U.S. Wealth Management business to Morgan Stanley Wealth Management.