NEW YORK (AP) – Morgan Stanley’s earnings fell 59 percent in the fourth quarter, the company said Thursday, as the investment bank had to book $990 million in charges related to the new tax law.
Morgan Stanley earned $686 million, or 29 cents a share, down from $1.67 billion, or 81 cents a share, from a year ago. Excluding the tax charges, the earnings were 84 cents a share, beating analysts’ forecasts.
Like other banks, Morgan Stanley had to write down the value of its deferred tax assets, which are tax credits the bank stockpiled after the financial crisis. The lower corporate tax rates under the new law lowered the value of those assets.
Morgan Stanley had a strong 2017 and it continued into the fourth quarter. The firm had net revenue in the quarter of $9.5 billion, up from $9.02 billion in the same period a year ago.
The institutional securities division, which includes the firm’s trading desks and its investment bank, saw a modest fall in profits and revenue in the quarter, largely due to a small drop off in investment banking advisory revenue. Trading was down in line with Morgan Stanley’s competitors, with bond trading revenue down by roughly half.
Morgan Stanley’s wealth management business continued to grow. That division, which has been a top priority for the bank for years, reported a pre-tax profit of $1.2 billion compared with $891 million in the same period a year ago.