Morgan Stanley posts fourth-quarter profit as legal costs drop

Morgan Stanley reported a $908 million fourth-quarter profit as legal costs shrank. Net income was $908 million, or 39 cents a share, compared with a loss of $1.6 billion, or 91 cents, a year earlier, when the firm booked costs tied to litigation over mortgage-related matters, the New York-based company said Tuesday in a statement. Chief Executive Officer James Gorman is attempting to strike the right balance in Morgan Stanley's bond-trading business amid the industry's years-long slide in revenue. The firm said last month that it was taking a $150 million severance charge as it pared back its fixed-income trading business. The cuts included 1,200 employees, including about a quarter of its fixed-income trading staff, a person briefed on the matter said. Mr. Gorman is set to provide an update on his strategy during a conference call Tuesday with analysts. Morgan Stanley shares have fallen 18% this year as global equities sank, compared with the 10 percent decline of the Standard & Poor's 500 Financial Index. Societe Generale SA downgraded the investment bank to sell last week, citing lowered expectations for trading revenue. In the wealth management unit, fourth quarter prorfit before taxes was $768 million, up 4% over the same period in 2014. The unit had record revenues of $15.1 billion in 2015, even as total client assets fell 2% to $1.99 trillion, according to supplemental earnings data from a Morgan Stanley spokeswoman. The wealth management business ended 2015 with 15,889 financial advisers, down 1% from the fourth quarter of 2014.