NEW YORK (AP) - It's tough being a big bank these days.
Morgan Stanley, the storied investment house, reported Thursday that its revenue was down sharply for April through June and its profit missed Wall Street expectations. Its stock was clobbered - down more than 5 percent.
The report capped a dismal season for the banking industry. This spring was marked by choppy financial markets, concern about the world economy, awkward adjustments to new regulations and one scandal after another.
"It was a tough quarter, and a disappointing quarter," Morgan Stanley CEO James Gorman said.
Of the country's six megabanks, only Wells Fargo, which brags about relying on plain-vanilla ways of making money, like taking deposits and making loans, was able to pull in more revenue than it did a year ago.
JPMorgan Chase was the only one of the Big Six that didn't slash jobs, but it had its own black eye - a surprise trading loss that ballooned to almost $6 billion and embarrassed CEO Jamie Dimon.
For Morgan Stanley, the embarrassment was the stock market debut of Facebook in May. Leading the public offering was supposed to be a coup for the bank, but instead it brought angry clients, regulatory investigations and lawsuits.
The headaches are still piling up for banks. In late June, Moody's slashed the debt ratings for every megabank except Wells Fargo. The following week, the British bank Barclays admitted that it had tampered with a critical global interest rate.
So far, the rate-fixing fallout has been contained to Barclays. But Bank of America, Citigroup and JPMorgan also help set the interest rate in question and are all but certain to face inquiries from regulators.
The bleak spring emphasizes the long shadow of the financial crisis, now almost four years behind the banks. They are still working out how to be successful in an environment of tougher regulation and public outrage.
"We don't see much relief coming soon, and it's forcing a lot of banks to say, "You know, this is more than what we can ride through, this is more than just temporary,"' said Bert Ely, a banking consultant in Alexandria, Va.
He said banks have decided that they must "get more serious about cost-cutting and getting out of businesses that they don't make much money in."
Together, Bank of America, Citigroup, Goldman Sachs, Morgan Stanley and Wells Fargo slashed nearly 24,000 jobs over the year, or about 2.6 percent of their total work force.
The sharpest cuts were at Goldman Sachs, which shed 9 percent of its jobs, Morgan Stanley, which cut 6 percent, and Bank of America, which cut 4 percent.
Morgan Stanley also said Thursday that it spent 21 percent less on compensation and benefits. It's bringing in smaller classes of trainees and moving people who don't need to be in New York to cheaper cities like Baltimore.
By contrast, smaller regional banks with more traditional business models have done well. On Thursday, BB&T Corp. of North Carolina and Fifth Third Bancorp. both reported healthy earnings growth, primarily because they issued more mortgages.
Morgan Stanley stock closed down 74 cents, or 5.3 percent, at $13.25 on Thursday. When Gorman took over in January 2010, and as recently as February 2011, the stock was above $30.
Like other banks, Morgan Stanley is expanding in steadier, fee-based businesses like advising individuals on how to invest their money.
Investment banking, on the other hand, can offer spectacular gains in good times but is riskier in a weak economy, and regulations are trimming what investment banks can do to make money anyway.
At Morgan Stanley, overall revenue fell 24 percent, to $7 billion from $9.2 billion. Results were worst in investment banking, where revenue plummeted 37 percent. The bank did less business in trading and selling stocks and bonds, and in advising companies on mergers and other issues.
The wealth management unit did best, with revenue falling a comparatively low 4 percent. That is the unit that includes Morgan Stanley's 51 percent stake in Morgan Stanley Smith Barney, the retail brokerage it co-owns with Citigroup. Morgan Stanley is eager to expand the bank's stake to 65 percent by September.
The other big investment bank, Goldman Sachs, is also pursuing steadier, if less interesting, revenue sources. It is highly concentrated in investment banking services and does not have a traditional consumer bank, but it is starting to expand its private banking business by lending money to corporate clients and the wealthy.
Morgan Stanley blamed some of its problems on a broader seizing up in the stock market because of the European debt crisis and a plodding U.S. economy. But Morgan Stanley also faced challenges specific to the bank.
Because of the ratings downgrade, some of Morgan Stanley's trading partners asked it to post more collateral than before. The Facebook debacle - Morgan Stanley was accused of sharing an analyst's report about the company with a few favored clients before everyone else - has tarnished its reputation.
Investors upset that Facebook's share price has gone down accuse the bank of releasing too many shares and setting the price too high. The stock went public at $38 per share but closed at $29 on Thursday.
"Their investment banking group isn't going turn around until the economy shows consistent growth and people forget about the Facebook fiasco that made them look like amateurs," said Erik Gordon, a professor in the business and law schools at the University of Michigan.
Chief financial officer Ruth Porat, asked in an interview with The Associated Press whether Facebook had hurt the bank's business, pointed out that Morgan Stanley is still No. 1 in initial public offerings globally.
Earlier, she told financial analysts that she expects markets to face more challenges from slow world economic growth and the crisis in Europe, but "some of the Morgan Stanley-specific issues are receding, and we look forward to more business-as-usual performance."
The revenue drop overshadowed the good news that the bank swung to a profit. Morgan Stanley earned $564 million for the quarter, compared with a loss of $558 million in the same period last year.
In that period, Morgan Stanley took big charges so it could cut down on expensive dividend payments to Mitsubishi UFJ Financial Group, a Japanese bank that gave Morgan Stanley a life-sustaining cash infusion in the depths of the 2008 financial crisis.