Thursday, February 9, 2012

Morgan Stanley Reports Net Loss: Worst Performance Since March 2009

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Morgan Stanley Reports Net Loss: Worst Performance Since March 2009

Morgan Stanley Summary Q4 2011 Morgan Stanley's Q4 financial performance was the worst overall since the QE March 2009. Loss per share was the worst since the QE June 2011. A loss of $1.7 billion was incurred regarding a settlement with MBIA, which ruined the quarter. CEO James Gorman continues "addressing a number of outstanding strategic and legacy issues." Morgan Stanley has yet to prove the core business can sustain growth and investor confidence.

Morgan Stanley Income Statement Q4 2011 Morgan Stanley reported net revenues of $5.71 billion, a net loss of -$250 million, and loss per share of -$0.15. From the prior quarter Q3 2011, net revenues were down -42.29%, net income down -111.37%, and earnings per share down -113.04%. From the prior year Q4 2010, net revenues were down -26.87%, net income down -129.90%, and earnings per share down -136.59%, respectively. Both the operating margin of -8.00% and the net margin of -4.38% decreased QoQ and YoY.

Morgan Stanley Balance Sheet Q4 2011 The Capital to Assets Ratio has been historically inadequate. The Tier 1 Capital Ratio and Tier 1 Common Ratio of 16.60% and 13.00%, respectively, are adequate. More commentary will be posted about the Morgan Stanley financial position at a later date.

Morgan Stanley Financial Performance by the Quarters Morgan Stanley Earnings per Share Current Loss per Share of -$0.15 are -113.04% QoQ, -136.59% YoY, and the 3rd loss in 6 quarters. The chart average EPS is $0.24.


Morgan Stanley Net Revenues, Operating Income, Net Income Consolidated revenues are reported net of interest expense. Current Net Revenues of $5.71 billion are -42.29% QoQ, -26.387% YoY, and a 10-quarter low. Current Operating Loss of -$457 million is a 10-quarter low. Current Net Loss of -$250 million is -111.37% QoQ, -129.90% YoY, and a 12-quarter low. The NR, OI, and NI chart averages are $7.30 billion, $1.10 billion, and $847 million, respectively.


Morgan Stanley Operating Margin and Net Margin Current Operating Margin of -8.00% is a 10-quarter low. Current Net Margin of -4.38% is an 11-quarter low. The OM and NM chart averages are 10.96% and 9.58%, respectively.


Morgan Stanley Tier 1 Capital, Tier 1 Common, and Capital to Assets Ratios The current Tier 1 Capital Ratio of 16.60% is a 2-quarter high and adequate. The current Tier 1 Common Ratio of 13.00% is a 3-quarter low and adequate. The current Capital to Assets Ratio of 8.27% is a multi-year high, encouraging, and adequate. The capital ratio has been historically inadequate. The chart averages for T1 Capital, T1 Common, and Capital ratios are 16.06%, 11.04%, and 6.92%, respectively.


Morgan Stanley Return on Assets Current Return on Assets of 0.51% decreased QoQ and YoY from the prior quarter peak of 0.63%. The chart average for ROA is 0.52% which overall is acceptable but should be better.


Morgan Stanley Income Statement Components Current NonInterest Expense, operating expenses, of $6.17 billion is a 5-quarter low. Current NonInterest Revenue of $5.44 billion is an 11-quarter low. Current Net Interest Income  of $270 million, which is immaterial, is a 7-quarter high. The chart averages for NIE, NIR, and NII are $6.20 billion, $7.13 billion, and $168 million, respectively.


Morgan Stanley Operating Expense Ratio The current Operating Expense Ratio of 86.54% is a multi-year high. The OER chart average is 70.24%.


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