Morgan Stanley suffers another loss

    The investment bank posts a big loss and cuts its dividend, but execs say the firm is healthy enough to repay TARP.

    By Colin Barr

    Morgan Stanley reported a much bigger-than-anticipated loss in the first quarter Wednesday, as the revenue at the bank's bread-and-butter equity sales and trading business plunged 74% from a year ago.

    The firm was also hit by its exposure to the tanking commercial real estate market. But executives emphasized their market share gains in recent quarters, cited their strong capital ratios and said they would like to repay the money they received from the government last fall.

    Morgan Stanley (MS, Fortune 500) shares dropped 3% in midday trading.

    The Wall Street investment bank said it lost $177 million, or 57 cents per share, in the quarter ended March 31. Analysts were expecting a loss of 8 cents a share, according to Thomson Reuters.

    Counting the payment of $401 million in preferred dividends, the bank reported a net loss to common shareholders of $578 million.

    The company also slashed its quarterly dividend by 81%, to 5 cents from 27 cents, in a bid to conserve $1 billion in cash annually.

    The latest results extend the firm's losing streak, and stand out from the rest of the major banks' earnings, which have been generally better than expected -- if sometimes of questionable quality. Last quarter, Morgan Stanley posted a $2.3 billion loss.

    Nonetheless, finance chief Colm Kelleher said during a conference call that Morgan Stanley remains "uniquely positioned to benefit" from what he called the "profound cyclical and structural changes" in the economy and the financial markets.

    Despite the latest quarterly loss, he said Morgan Stanley is "more than comfortable" with its capital cushion against future losses and would like to repay the $10 billion it got last fall from the Troubled Asset Relief Program.

    "All we will say is we would like to repay TARP capital," he said. Some of the bank's biggest rivals, notably Goldman Sachs (GS, Fortune 500) and JPMorgan Chase (JPM, Fortune 500), have said they want to repay TARP funds.