Morgan Stanley Posts $2.2 Billion Profits for Q3

October 19 00:00 2011

New York, October 19 ( – In a fitting reply to analysts’ estimates and concerns that the bank’s euro zone exposure would damage its performance and profitability, Morgan Stanley posted a narrow profit in the third quarter.

James Gorman, Morgan Stanley chief executive reported a net profit of $2.2 billion for the third quarter and said that the group had “effectively navigated turbulent markets”. However, the underlying profit of Morgan Stanley was much lower as the results were boosted by an accounting treatment which books a gain when its own debt falls in value. Such debt valuation adjustment accounted for $1.12 of its $1.15 earnings per share. Analysts had, however, expected an underlying loss.

For the three months till the end of September, Morgan Stanley posted revenue of $9.9 billion compared with $6.8 billion for the same period a year ago. It also reported $1.15 earnings per share compared with a net loss of $0.07 per share in the third quarter last year.

Net revenue of $6.5 billion was reported by the group’s main “institutional securities” division compared with $2.9 billion a year ago. If the DVA distortion is stripped out, the net revenue of the division was $3 billion compared with $2.2 billion in the third quarter last year, with a drop of 29 percent in underwriting revenues.