Morgan Stanley profit falls as Covid-19 wreaks damage

Net income for the three months to the end of March fell 29% to $1.7bn (£1.4bn) from $2.4bn a year earlier, missing analyst estimates. Net revenue fell 8% to $9.5bn.

Analysts surveyed by Bloomberg had on average expected net income of $2.8bn. The bank was hit by "notable" charges of $610m on loans held for sale and a $388m credit loss provision at its institutional securities division.

Investment banking revenue fell 1% as advisory income dropped to $362m from $406m with corporate dealmaking on hold. Sales and trading revenue boomed, rising 30% to $4.9bn as clients tried to keep up with volatile markets caused by the Covid-19 crisis. Wealth management revenue fell to $4bn from $4.4bn.

Morgan Stanley said it a prolonged economic crisis would harm its operating results and the attainment of its financial targets. The results round off a traumatic reporting period for the US's biggest banks, which have set aside more than $25bn for expected credit losses with the American economy heading for a severe recession.

Morgan Stanley's chief executive James Gorman, who contracted Covid-19 but has now recovered, said: "Over the past two months, we have witnessed more market volatility, uncertainty and anxiety as a result of the devastating Covid-19 than at any time since the financial crisis. While it’s too early to predict how this will unfold, Morgan Stanley navigated the quarter well given the conditions."