Morgan Stanley on Wednesday reported third-quarter profit fell 17 percent, as the No. 2 U.S. investment bank was slammed by a global credit crisis that cut into stock trading, corporate lending, and results from investments.
Quarterly profit fell to $1.54 billion, or $1.44 per share, from $1.85 billion, or $1.75 per share, in the year ago period. Income from continuing operations, which includes results of the recently spun-off Discover Financial Services, slid 7 percent to $1.47 billion, or $1.38 per share, from $1.59 billion, or $1.50 per share.
Stronger investment banking fees helped prop up revenue during the third quarter, which rose 13 percent to $7.96 billion from $7.06 billion a year earlier.
Analysts polled by Thomson Financial expected a profit of $1.54 per share on $8.35 billion of revenue.
John Mack, Morgan Stanley's chairman and chief executive, pinned the quarter's poor performance on the "impact of the severe market disruption on some areas of the firm _ including our credit products, leveraged lending and quantitative strategies businesses."
The company said its saw losses of $940 million in the quarter from the decreased market value of loans on its books as well as other financing commitments. Those losses cut 33 cents per share off of its bottom-line results.
Morgan Stanley's stock has tumbled 24 percent since the end of the second quarter, as financial services firms were squeezed by defaults in mortgage positions and a tightening credit environment.