Morgan Stanley's profits fall 42 pct
NEW YORK (AFP) — US investment bank Morgan Stanley revealed a sharp 42 percent slide in quarterly profits Wednesday, mainly as it wrote off 2.3 billion dollars largely tied to ailing mortgage investments.
Morgan Stanley, like many of its Wall Street rivals, has seen its finances battered by the US housing downturn which has triggered mounting losses on mortgage-backed securities.
The New York-based bank reported a fiscal first quarter profit of 1.55 billion dollars, down from 2.67 billion in the same period a year ago. Earnings per share tumbled to 1.45 dollars from 2.51 dollars.
The investment bank's earnings, however, were better than expected as most analysts had forecast Morgan Stanley would post earnings of 1.03 dollars per share.
"While many of our businesses are facing challenging market conditions that we expect to continue in the months ahead, we are satisfied with how Morgan Stanley navigated the ongoing market turbulence," Morgan Stanley's chairman and chief executive John Mack said.
Most big Wall Street banks are enduring hefty profit declines due to losses related to mortgage-backed securities, but also as a broadening credit crunch sweeps the banking industry.
The Federal Reserve has slashed US interest rates in a bid to stop credit gumming up and over the weekend approved a takeover of Bear Stearns which had appeared on the verge of collapse late last week.
Morgan Stanley is weathering the crisis better than some of its peers. Lehman Brothers announced a 57 percent slide in profits Tuesday while Goldman Sachs said its latest quarterly earnings had dived 53 percent.
Morgan Stanley said a combination of mortgage-related losses, other trading losses and markdowns on complex debt instruments had forced it to write off 2.3 billion dollars.
Some shareholders, aggrieved at the bank's billion dollar losses, are calling for management reforms ahead of Morgan Stanley's annual shareholder meeting on April 8.
The CtW Investment Group, which is affiliated with big public pension groups that hold an estimated six million shares in Morgan Stanley, is calling for "stronger independent leadership" at the bank and says Mack should not serve as both chairman and CEO.
