Morgan Stanley’s wealth management unit has posted pre-tax income from continuing operations of $1bn for the fourth quarter of 2018, versus $1.2bn in the corresponding quarter of 2017.

The division’s net revenues dropped 7% to $4.1bn from $4.4bn last year. The fall was said to be due to losses on investments related to employee deferred compensation plans. Pre-tax margin stood at 24.4%.

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The unit’s asset management revenues rose to $2.6bn from $2.5bn a year earlier. The bank attributed the rise to higher asset levels and positive flows.

Transactional revenues of the unit surged 45% to $422m on a year-on-year basis.

The unit’s net interest income stood at $1.1bn, up 2% from last year. The increase was said to be driven by growth in lending.

At the end of December 2018, client assets totalled $2.3 trillion and client assets in fee-based accounts totalled $1 trillion.

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The banking group said that the unit’s 15,694 wealth management representatives generated average annualised revenue per representative of $1.1m in the quarter.

Wealth management client liabilities were $83bn at the end of the quarter, as against $80bn in the previous year.

Overall, the banking group reported net revenues of $8.5bn for the fourth quarter of 2018, a decrease of 10% from $9.5bn in the same quarter of 2017.

Net income applicable to Morgan Stanley was $1.5bn, compared to $643m last year.

Morgan Stanley chairman and CEO James Gorman said: “In 2018 we achieved record revenues and earnings, and growth across each of our business segments – despite a challenging fourth quarter.

“We delivered higher annual returns, producing an ROE of 11.8% and ROTCE of 13.5%, as we continued to invest in our businesses. While the global environment remains uncertain, our franchise is strong and we are well positioned to pursue growth opportunities and serve our clients.”