Bloomberg reports that Morgan Stanley posted a loss of $1.01bn compared with a profit of $2.2bn a year earlier.
The number includes the $2.3bn negative impact from an accounting charge related to tightening from debt-related credit spreads, or DVA.
Chief Executive Officer James Gorman, 54, is trying to improve returns at the brokerage unit and shrink the fixed-income trading division to reduce capital demands. The bank had the lowest first-half return on equity of the 10 largest U.S. lenders and is trading at two-thirds of its liquidation value, compared with 96% at Goldman Sachs.
Gorman said: 'Our third quarter results show a balanced, strategically focused franchise that has attained stronger revenues and executed on key goals. The rebound in Fixed Income & Commodities sales and trading indicates that clients have re-engaged after the uncertainty of the rating review in the previous quarter.
'We are beginning to unlock the full potential of the Global Wealth Management franchise, having increased our ownership of, and agreed on a purchase price for the rest of, Morgan Stanley Wealth Management. I am confident in our potential to enhance profitability and increase value for our shareholders in the quarters ahead'.
Bloomberg also reports that Morgan Stanley set aside $5.2bn in the first nine months of 2012 to pay investment-bank employees, a 9% decline from a year earlier.
Pay expenses at the institutional-securities unit, which includes salaries, bonuses, benefits and the cost of deferred pay for bankers and traders, were $1.6bn in the third quarter, an 8 percent increase from the third quarter last year.
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