John Mack yesterday provided evidence that his efforts to revitalise Morgan Stanley were bearing fruit by announcing more than doubled net income of $1.96 billion (€1.54 billion) in the second quarter.

The Wall Street bank's performance included very strong trading revenues and buoyant investment banking profits after a slow start to the year.

The results were well ahead of the analysts' forecasts and compared well with the competition in what have been very favourable market conditions.

Mr Mack, who took over as chief executive a year ago, said the results were "outstanding".

David Sidwell, chief financial officer, said the group remained "very optimistic" about the rest of the year, in spite of much more difficult market conditions. While there had been no drop in investor or corporate confidence, he cautioned that it was "too early to say whether markets are experiencing a more fundamental shift or a speed bump".

The core institutional securities business achieved record pretax income of $2.3 billion, up 179 per cent on last year, on revenues up 71 per cent at $5.7 billion. Fixed-income sales and trading was slightly down on the record first quarter, due partly to a weaker commodities business.

Rival Goldman Sachs had a record performance from its bigger fixed-income business in the second quarter. But at a group level, Morgan Stanley's income was ahead of the first quarter, helped by lower-than-expected compensation costs, while Goldman was slightly down.

David Trone, analyst at Fox-Pitt Kelton, said Morgan Stanley had outperformed its rivals and that the run of figures over the past three quarters should begin to "convert those sceptics".

- (Financial Times service)