(Reuters) -Morgan Stanley’s profit dropped in the fourth quarter, hurt by a combined $535 million in one-time charge that offset gains from a rebound in investment banking activity.
The bank, alongside rival large-cap banks, are paying a special assessment fees to the Federal Deposit Insurance Corporation to replenish a fund that was drained by almost $16 billion in March 2023 after the collapse of mid-sized U.S. lenders.
It paid $286 million in special assessment fees to the regulator and $249 million as legal charge.
“We begin 2024 with a clear and consistent business strategy and a unified leadership team. We are focused on achieving our long-term financial goals and continuing to deliver for shareholders,” CEO Ted Pick said in a statement.
Mergers and acquisitions activity fell to its lowest level in 10 years globally in 2023, according to data from Dealogic. High interest rates and an uncertain economic outlook have weighed on confidence, keeping companies on the sidelines.
Still, several high-profile initial public offerings and merger announcements at the end of last year sparked optimism about a nascent recovery in 2024.
Morgan Stanley’s investment banking revenue rose 5% in the fourth quarter from a year ago.
Its net income fell to $1.5 billion, or 85 cents per diluted share, in the three months ended Dec. 31, compared with $2.2 billion, or $1.26 per diluted share, a year ago.
Shares in the bank rose nearly 1% in premarket trading after results.
The results compare with fellow Wall Street giants that reported lower profit on Friday, clouded by special charges and job cuts.
Rival Goldman Sachs’ profit jumped 51% in the fourth quarter as its equity traders capitalized on a nascent recovery in markets.
Earlier this month, Morgan Stanley agreed to pay $249.4 million to end years-long criminal and civil investigations into its handling of large stock trades for customers.
(Reporting by Manya Saini in Bengaluru and Tatiana Bautzer in New York; Editing by Lananh Nguyen and Arun Koyyur)
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