Morgan Stanley Tops Estimates; Loses 300 Advisors

Morgan Stanley (MS) reported a first-quarter loss of $119 million, or 6 cents a share, compared with last year’s profit of $736 million, or 50 cents a share, on Thursday. The loss was due mainly to a debt valuation adjustment.

Excluding that adjustment, the operating income attributable to the bank was $1.4 billion, or 71 cents a share – topping earnings estimates of 44 cents.  

The number of Morgan Stanley Smith Barney advisors dropped 2% from last quarter and 5% from last year to 17,193, while total assets under management hit nearly $1.75 trillion, a jump of 7% from the previous quarter and a 2% increase from last year. (It had 17,512 advisors in the fourth quarter of 2011 and 18,124 in the first quarter of 2011.)

These reps produced average trailing-12-month fees and commissions of $787,000 and managed average client assets of $101 million; these figures were both up about 5% from the same year-ago period.  

“This quarter is further evidence that Morgan Stanley has rebounded from the financial crisis of 2008 and is in a significantly stronger position,” said Chairman and CEO James P. Gorman, in a statement. “Revenues of $8.9 billion, excluding the impact of [the $2 billion debt valuation adjustment], were higher on both a year-over-year and a quarter-over-quarter basis.”

As for the wealth-management unit, “We are intensely focused on completing the transition of Morgan Stanley Smith Barney to the new, state-of-the-art technology platform this summer …,” Gorman said.

Morgan Stanley’s global wealth management business, which includes the MSSB joint venture, reported net revenue of $3.4 billion. Its pre-tax profit margin of 11% was up slightly from a year ago and from the previous quarter.