BENGALURU - Morgan Stanley’s profit dropped in the fourth quarter, hurt by a combined US$535 million (S$719 million) in one-time charge that offset gains from a rebound in investment banking activity.

The bank, alongside rival large-cap banks, is paying special assessment fees to the Federal Deposit Insurance Corporation to replenish a fund that was drained by almost US$16 billion in March 2023 after the collapse of mid-sized US lenders.

It paid US$286 million in special assessment fees to the regulator and US$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,” chief executive officer 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 2023 sparked optimism about a nascent recovery in 2024.

Morgan Stanley’s investment banking revenue rose 5 per cent in the fourth quarter from a year ago.

Its net income fell to US$1.5 billion, or 85 US cents per diluted share, in the three months ended Dec 31, compared with US$2.2 billion, or US$1.26 per diluted share, a year ago.

The results compare with fellow Wall Street giants that reported lower profit on Jan 12, clouded by special charges and job cuts.

Rival Goldman Sachs’ profit jumped 51 per cent in the fourth quarter as its equity traders capitalised on a nascent recovery in markets.

Earlier in January, Morgan Stanley agreed to pay US$249.4 million to end years-long criminal and civil investigations into its handling of large stock trades for customers. REUTERS