NEW YORK — Morgan Stanley posted a fourth-quarter profit following big prior-year losses as the investment bank is setting the stage for further improvement in 2010.
There is a new chief executive on board, James Gorman, and the company should begin to reap the rewards of its joint venture with Citigroup Inc.'s Smith Barney unit, the largest brokerage force in the world.
"While the environment remains extremely fluid, we are confident the steps we have taken this year will ensure that Morgan Stanley remains well-positioned," Gorman said in a statement.
Morgan Stanley posted a profit of $617 million, or 29 cents a share. Earnings from continuing operations were 14 cents a share. Analysts surveyed by Thomson Reuters expected a profit of 36 cents a share.
Revenue was $6.84 billion, compared with $7.81 billion predicted by analysts.
Morgan Stanley was able to rebound during the third quarter after three-straight quarters of losses. One reason is that former Chief Executive John Mack pulled back in risk in the immediate aftermath of the financial crisis, and then gave traders more freedom toward the end of the year.
In the year-earlier period, Morgan Stanley had a loss of $10.95 billion, or $11.35 a share, on negative revenue of $13 billion because of large losses in the institutional-securities business, which includes capital markets and investment banking. Year-ago results were recalculated because last year the bank was on a different earnings calendar.
The securities firm reported that its Value At Risk, known on Wall Street as VaR, rose to $132 million in the fourth quarter compared with $105 million in the prior year and $118 million in the third quarter. It stands for the maximum that could potentially be lost trading on a single day.
Morgan Stanley shares were down 1.4% at $30.72 premarket. The stock rose 88% in 2009 and has continued to rise since the beginning of this year.