However, adjusted earnings per share was $0.84, beating expectations for the Bank's performance.
James Gorman's bank reported its best-ever quarter for its core business, wealth management, buoyed by a huge client base investing in stock markets that just doesn't seem to ever go down.
Like most other big US banks, Morgan Stanley took a fourth-quarter charge due to a USA tax overhaul signed into law in December, but analysts have been looking past those one-time hits to focus on the long-term benefits of lower tax rates. Earnings per share and revenue were$2.88 and $34.63 billion in 2016. This is an increase over its earnings per share of 74 cents from the same time previous year.
S. bank rose almost 2 percent to $56.40 in pre-market trade. The financial services company reported net income of $1.67 billion for its fourth quarter of the previous year.
Net income fell to $686 million or 29 cents per share in the fourth quarter ended December 31, from $1.67 billion or 81 cents per share, last year.
The firm took a charge of $990 million or 55 cents per share for a tax provision. Shares of other major banks were flat on Thursday morning.
Morgan Stanley reported revenue of $9.50 billion for the fourth quarter of 2017.
Last year, the bank settled with MA for $1 million over sales contests pushing the loans. Investors had attributed a higher value to Goldman for about a decade but a collapse in trading revenue a year ago has hit the bank harder than its rival.
The bank also had a weak quarter for fixed income sales and trading, taking a 46% decline in revenues from that sector.
Morgan Stanley also notes that the new tax reform heavily hit its earnings for the fourth quarter of the year.
Morgan Stanley is also working to keep its efficiency ratio, which measures expenses relative to revenue, to less than 73 percent, down one percentage point from its prior target.
Excluding the tax charge, its return on equity was 9.4 percent a year ago. A year ago it posted an efficiency ratio of 72.6 percent. The loss still came in below Wall Street estimates.