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Morgan Stanley profits more than halve

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Morgan Stanley profits more than halved in the first three months of the year following “challenging” market conditions.

Net profit fell by 54% to $1.1bn (£776m), down from $2.4bn in the first quarter of last year.

Low oil prices hit the US bank’s trading business and helped push revenues down from $1.9bn to $873m.

All the big US banks have seen quarterly profits cut by falls in trading and investment banking revenue.

Morgan Stanley chief executive James Gorman said: “The first quarter was characterised by challenging market conditions and muted client activity. Against that backdrop, our businesses delivered stable results.

“While we see some signs of market recovery, global uncertainties continue to weigh on investor activity.”

Despite the sharp fall in profit, Morgan Stanley’s shares, which have fallen almost 20% since the start of the year, rose 2.1% in pre-market trading on the better-than-expected results.

Last week Citigroup, JP Morgan Chase, Wells Fargo and Bank of America also reported lower first quarter profits after setting aside money to cover losses on energy loans.

Falls in commodity prices, concerns about China’s economy and uncertainty about US interest rate rises meant that markets were jittery at the beginning of the year and traders and investors were reluctant to do business.

Regulators last week rejected the plans of five big US banks for closing their operations in the event of a financial crisis.

Banks labelled “too big to fail” must have a so-called “living will” that would allow them to wind down without the help of public funds.

Bank of America, Bank of New York Mellon, JPMorgan Chase, State Street and Wells Fargo have until 1 October to submit improved plans.

The Federal Deposit Insurance Corporation (FDIC) and the Federal Reserve board jointly rejected the banks’ plans.

The Federal Reserve said Morgan Stanley’s plans were not credible, while the FDIC came to the same conclusion about Goldman Sachs’ proposals.

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