Morgan Stanley stole a march on its banking rivals yesterday, reporting an increase in bond sales and trading that allowed it to beat first-quarter earnings expectations.

Morgan Stanley stole a march on its banking rivals yesterday, reporting an increase in bond sales and trading that allowed it to beat first-quarter earnings expectations.

The bank reported net revenues of $8.9 billion, excluding a negative $2 billion accounting quirk created by a recovery in the price of the bank’s own bonds. That generated net income of $1.4 billion, or 71 US cents a share, outpacing the 45 cents a share expected by analysts.

“This quarter is further evidence that Morgan Stanley has rebounded from the financial crisis of 2008 and is in a significantly stronger position,” said James Gorman, chairman and chief executive.

Morgan Stanley is trying to change the way it does business ahead of new banking regulations by becoming less dependent on volatile trading revenue.

The bank is buying retail brokerage Smith Barney from Citigroup to help this shift and strengthen its position in the wealth management market.

But results appeared to suggest Morgan Stanley was winning market share in fixed-income trading – one of the biggest revenue drivers for US banks. Revenue from bonds and commodities jumped 34 per cent from a year ago to $2.6 billion. – (Copyright The Financial Times Limited 2012)