Morgan Stanley Sees 4Q Loss, But Better Than Expected

Morgan Stanley (NYSE:MS) reported a loss for the fourth quarter, primarily due to a charge on account of a litigation settlement, but the results were better than analysts’ expectations.

Net loss was $275 million (15 cents a share) compared to net earnings of $600 million (41 cents a share) a year ago. The bank took a charge of $1.7 billion (59 cents a share) due to its settlement with MBIA Inc. Overall revenue was lower by 26 percent to $5.7 billion, owing primarily to difficult conditions due to the European sovereign debt crisis.

The bank was only moderately successful in curtailing employee compensation costs compared to its competitors – its full year $16.4 compensation bill amounted 51 percent of revenue. This compares with 42 percent for Goldman Sachs (NYSE:GS) and 34 percent for JP Morgan Chase (NYSE:JPM).

Analysts had expected a loss of 57 cents a share on continuing operations whereas the bank lost only 14 cents a share. This sent its shares up 4.6 percent in pre-market trading.