Morgan Stanley , one of Wall Street's leading firms, Wednesday posted a profit decline for the fifth consecutive quarter as investment banking and brokerage fees dried up amid grim economic conditions.

Companies were reluctant to sell stock or pull the trigger on merger deals -- which carry fat banking fees -- against the backdrop of a U.S. recession. Morgan Stanley, which also owns the Discover credit card, reported a 28 percent decline in fourth-quarter profit, as the effects of Sept. 11 took their toll on capital market activity.

Morgan Stanley, which also owns the Discover credit card, reported a profit of $870 million, or 78 cents a share, for its fiscal fourth quarter ended Nov. 30. That compared with earnings of $1.21 billion, or $1.06 a share, a year ago.

Analysts were expecting the company to earn between 50 to 75 cents a share, with a consensus estimate of 66 cents, according to market research firm Thomson Financial/First Call.

"This has been a difficult year, with the economic downturn and the extraordinary events of September 11," Chief Executive Philip Purcell and President Robert Scott said in a joint statement. "We have focused on reducing expenses throughout 2001 and will continue this effort in 2002."

Total net revenues fell 17 percent to $4.6 billion.

Advisory revenue fell 44 percent to $319 million, while underwriting revenue dropped 12 percent to $479 million due to a slump in stock issues.

Shaky markets and the recession kept companies from issuing stock for fear it would perform poorly, and prevented mergers as companies didn't want to use their beaten-down shares as currency in a deal.

Morgan Stanley, which is the second-largest U.S. full-service brokerage behind Merrill Lynch & Co. with about 13,700 brokers, said brokerage revenues fell 23 percent to $986 million as its customers were still shying away from investing in stocks.

Institutional sales and trading revenues fell 3 percent to $1.4 billion due to weak equity operations, but bond-related businesses did well thanks to higher trading volumes.

Asset management net income was $545 million, compared with $677 million a year ago. Net income at Morgan Stanley's Discover credit card unit was up 31 percent to $193 million.

Morgan Stanley trimmed its payroll expenses by 20 percent, paying out $1.42 billion in compensation and benefits. Marketing and business development costs dropped 37 percent to $287 million.

Morgan Stanley shares closed at $53.56 in Tuesday trading on the New York Stock Exchange, below their 52-week high of $90.40. The shares rose 3 percent during its fourth quarter, underperforming the Amex Broker-Dealer Index , which rose 8 percent in the time period.