Morgan Stanley reported a net loss for the first quarter ended March 31, 2009 of $177m compared with net income applicable of $1,413m a year ago.

In a statement the firm claimed it had delivered solid results in many of its businesses during the first quarter - though these results were negatively impacted by the $1.5bn decrease in net revenues related to the tightening of its credit spreads on certain of its long-term debt and net losses of $1bn on investments in real estate, amid the industry-wide decline in this market.

However, the results for the quarter include a tax benefit of $331m resulting from the anticipated repatriation of non-U.S. earnings at lower than previously estimated tax rates.

Positives for the firm included its investment banking division which delivered net revenues of $0.8bn, fixed income sales and trading delivered net revenues of $1.3bn, and equity sales and trading delivered net revenues of $0.9bn.

It also noted that headcount reductions of 5% during the quarter and lowered non-compensation expenses of 9% from last year's first quarter meant it is on track to achieve its previously announced annual cost savings target of $2bn.

John J. Mack, chairman and chief executive of Morgan Stanley, said: "While challenging markets continued to impact our results this quarter, we saw improved performance across most of our businesses during the past three months. The Firm delivered strong results in investment banking, commodities, interest rates and credit products as well as solid performance in global wealth management. In fact, Morgan Stanley would have been profitable this quarter if not for the dramatic improvement in our credit spreads - which is a significant positive development, but had a near-term negative impact on our revenues.

"In this volatile environment, we have focused on prudent stewardship of our balance sheet, capital and risk profiles, as evidenced by our exceptional capital ratios. We have also moved quickly to realize attractive new opportunities including the creation of a new industry leader in wealth management with the Morgan Stanley Smith Barney joint venture as well as our new securities joint venture with MUFG. Although the near-term environment remains challenging, we remain confident about the value we can deliver to our clients and shareholders over the long term."