By Christine Harper
April 22 (Bloomberg) -- Morgan Stanley, the fifth-biggest U.S. bank by assets, reported a bigger-than-estimated loss after real estate and debt-related writedowns overwhelmed trading gains. The company cut its dividend to 5 cents a share.
The first-quarter loss was $177 million, or 57 cents a share, New York-based Morgan Stanley said today in a statement. The average estimate of 19 analysts surveyed by Bloomberg was for a loss of 8 cents a share. The company had a loss of $1.3 billion in December before the start of the new fiscal year.
Chief Executive Officer John Mack converted Morgan Stanley, the second-biggest U.S. securities firm, into a bank last year and announced plans in January to take control of Citigroup Inc.’s brokerage as he seeks to restore earnings and limit risks. The company had $1 billion of real estate losses in the first quarter and writedowns of $1.5 billion from an accounting loss related to an improvement in the firm’s debt.
“Residential real estate was last year’s problem and this year’s problem is all the other loan categories, specifically commercial real estate,” said Peter Kovalski, a fund manager at Alpine Woods Capital Investors LLC in Purchase, New York, which oversees about $5 billion. “It’s still going to be a difficult business environment for banks for the remainder of this year,” said Kovalski, who spoke before earnings were released.
Morgan Stanley fell to $22.75 from $24.65 at the close on the New York Stock Exchange yesterday. The shares have climbed 54 percent this year after dropping 70 percent last year.
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