The banking and wealth management house reported a generally stronger batch of results for the fourth quarter and like its peers, is affected by recent major US tax changes.

Morgan Stanley today reported net revenues of $9.5 billion for the fourth quarter, up from $9.0 billion a year ago.

When specific tax items are excluded, net income applicable to Morgan Stanley was $1.7 billion, or $0.84 per diluted share, compared with net income of $1.5 billion, or $0.74 per diluted share, for the same period a year ago.

As is the case with a number of other US financial institutions, Morgan Stanley has taken a hit from the recently enacted US tax changes because of how tax bills are calculated in financial results, although the impact is seen as a one-off.  The firm has recorded a discrete tax provision of $990 million.

At its wealth management arm, Morgan Stanley reported pre-tax income from continuing operations of $1.2 billion compared with $891 million in the fourth quarter of last year. The quarter’s pre-tax margin was 26 per cent.

Net revenues for Q4 were $4.4 billion compared with $4.0 billion a year ago.

Morgan Stanley reported asset management revenues of $2.5 billion increased from $2.2 billion a year ago reflecting higher asset levels and positive flows.

Transactional revenue of $790 million increased from $774 million a year ago primarily reflecting gains on investments associated with certain employee deferred compensation plans, partially offset by lower fixed income revenues.

Compensation costs for Q4 of $2.4 billion increased from $2.2 billion a year ago primarily driven by higher revenues. Non-compensation expenses of $837 million decreased from $876 million a year ago. Results for the prior year quarter included a provision in connection with the reporting of incorrect cost basis tax information to the Internal Revenue Service and retail brokerage clients.

Total client assets were $2.4 trillion and client assets in fee-based accounts were $1.0 trillion at the end of the quarter. Fee-based asset flows for the quarter were $20.9 billion.

Wealth Management representatives of 15,712 produced average annualized revenue per representative of $1.1 million in the current quarter.

Last year, Morgan Stanley announced it was walking away from a 14-year-old industry “protocol” through which firms agreed not to sue rivals in the event of staff defections. The US firm said the pact had been increasingly abused. UBS and Citigroup have reportedly followed suit.