Morgan Stanley lost $ 911 million when Archegos Capital Management imploded last month, tarnishing a record quarter for the Wall Street firm.
The New York-based bank reported quarterly earnings of $ 4.1 billion, or $ 2.19 a share, on revenue of $ 15.7 billion on Friday. That was better than analyst consensus estimates surveyed by FactSet of earnings per share of $ 1.72 on revenue of $ 14.1 billion.
Morgan Stanley reaped big gains from the euphoric market conditions of early 2021. But record performances at many of the banking companies were offset by credit and trading losses it recorded after a fire sale of more than $ 30 billion in shares linked to Archegos, the family. office run by former Tiger Asia manager Bill Hwang.
More than two-thirds of the banks’ losses on Archegos were related to collateral that Morgan Stanley sold at lower prices to repay margin loans the fund had borrowed to increase its stake in a small number of stocks. The rest of Archegos’ losses came when the bank closed smaller Archegos positions that it had not seized to meet the margin call, Chief Executive James Gorman said during a conference call with analysts.