Morgan Stanley has reported a net loss of $177 million for 2009’s first quarter, compared with net income of $1.413 billion for the first three months of 2008. Net revenues were $3 billion, 62 per cent down on last year’s first quarter.

The bank’s Global Wealth Management Group recorded net revenues of $1.3 billion for the first quarter of this year, down approximately 20 per cent from the same period a year ago, excluding the sale of Morgan Stanley Wealth Management SV, SUA. Pre-tax income from the GWM group was $119 million, compared to $949 million in the first quarter of 2008.

GWM results for Q1 2008 included pre-tax income of $708 million from the sale of Morgan Stanley's Spanish onshore mass affluent wealth management business to La Caixa. Additionally, the bank said GWM results for the first quarter of this year included net expenses of $39 million related to organisational and integration costs for the Morgan Stanley Smith Barney joint venture with Citigroup .

The bank said the decline in its GWM revenues reflected lower asset management and transactional revenues. Total client assets were $525 billion at 31 March 2008, down from $706 billion a year before. This 26 per cent decline was primarily driven by asset depreciation, Morgan Stanley said.

Asset Management posted a pre-tax loss of $559 million, compared with a pre-tax loss of $112 million in last year's first quarter. Net revenues were $72 million, compared with $574 million a year ago.

At end-March 2008, the division’s assets under management or supervision were $356 billion - 38 per cent lower than the previous year - reflecting reduced asset values and high levels of outflows from the industry. Outflows totalled $86.3 billion since the first quarter of last year, primarily in the bank’s money market and long-term fixed income funds.

"While challenging markets continued to impact our results this quarter, we saw improved performance across most of our businesses during the past three months. The firm delivered strong results in investment banking, commodities, interest rates and credit products as well as solid performance in global wealth management.

"In fact, Morgan Stanley would have been profitable this quarter if not for the dramatic improvement in our credit spreads - which is a significant positive development, but had a near-term negative impact on our revenues,” said John Mack, chairman and chief executive.

The bank, which intends to make annual cost savings of $2 billion, said it had made a 5 per cent reduction in its headcount in the first quarter and had lowered non-compensation expenses by 9 per cent year-on-year.

Morgan Stanley’s Tier 1 capital ratio (Basel I) was 16.4 per cent; excluding TARP capital it would be 12.9 per cent.

In other developments, Morgan Stanley’s chief financial officer Colm Kelleher told Dow Jones the bank is interested in adding to its wealth management business by acquiring a retail bank catering to high-end clients.

"We are not going to have 5,000 branches," Mr Kelleher told the news service. "Our strategy is a supplement and complementary to our global wealth-management high net worth business. We are not in the business of retail banking."