For the fiscal year to November 30 net revenues were at $24.7bn, down 12% from the same time last year.
The US investment bank has also revealed low performance in interest rate, credit and currency products and net mortgage related losses of $2.6bn.
But the bank maintains that these losses have been offset by fixed income sales and trading net revenues of $3.9bn.
John Mack, chairman and chief executive of Morgan Stanley, says: “The global capital markets – and the financial services industry – have experienced unprecedented turmoil in the past few months.
“These exceptional market conditions profoundly impacted our performance this year, especially in the fourth quarter. We are moving aggressively to reposition the firm for the future.”
The news follows Goldman Sachs’ results earlier in the week, which reported net losses of $2.12bn for Q4.
Both Morgan Stanley and Goldman Sachs were forced to become commercial banks in the wake of the collapse of Lehman Brothers in September.