US investment bank Morgan Stanley has reported a plunge in quarterly earnings as the continuing credit crunch slowed investment banking and fuelled trading losses.
The drop in profits came despite $1.43 billion of gains from sales of assets. Morgan Stanley reported profits from continuing businesses of $1.03 billion, or 95 cents a share, for its second quarter to the end of May.
This was down from $2.58 billion a year earlier, but was slightly better than analysts had expected. Net revenue fell to $6.5 billion from $11.5 billion last year.
A breakdown in debt markets last year continues to hurt financial companies, which have been forced to write down more than $400 billion of assets, slash jobs and raise new capital. Morgan Stanley suffered $9.4 billion of fourth-quarter sub-prime trading losses and then reported that first-quarter earnings fell by half.
Morgan follows rival Lehman Brothers, which on Monday reported a disappointing $2.8 billion loss. Goldman Sachs Group on Tuesday said its profit fell by 11% amid relatively light losses.
