Morgan Stanley posted a jump in first-quarter trading revenue while Goldman Sachs's dropped, the first such divergence in two years.

Morgan Stanley today reported a surprise 9 per cent increase in fixed-income trading revenue, the only gain among major Wall Street banks, and had the biggest improvement in equity trading as it overtook its larger rival for the top spot in that business.

Goldman Sachs suffered the sharpest decline in equity trading, citing a slump in Japan and emerging markets.

Goldman, led by chief executive Lloyd Blankfein, still beat analysts' estimates as the firm posted the most investment-banking revenue among US banks for the first time since the financial crisis.

Morgan Stanley chief executive James Gorman got a rare win as fixed-income revenue was the highest in two years even as the company continued to shrink capital used by the unit.

Morgan Stanley firm still had the lowest trading revenue among the Wall Street banks at $3.36 billion, and both it and Goldman Sachs trailed JPMorgan Chase and Citigroup.

All of the New York-based firms are facing a prolonged slump in fixed- income trading, which has fallen in nine of the past 13 quarters.

Morgan Stanley's revenue from trading, a business overseen by Colm Kelleher, included $1.65 billion from fixed-income, currencies and commodities, and $1.71 billion from equities.

Goldman Sachs's revenue from sales and trading, led by Pablo J Salame, Isabelle Ealet and Ashok Varadhan, was $4.43 billion. That included $2.84 billion from fixed-income trading and $1.6 billion for equities.

Overall, Goldman Sachs’s first-quarter net income fell 10 per cent to $2.03 billion, or $4.02 a share, still ahead of analyst projections. Total revenue declined 8 per cent to $9.33 billion.

– (Bloomberg)