Robust fixed income trading results launched Morgan Stanley to a better-than-expected first-quarter profit today, sending its shares up.
With its quarterly profit, Morgan Stanley joined in a rally that began last week with strong results from JPMorgan Chase & Co and continued with Goldman Sachs Group's profit surge yesterday.
Morgan Stanley in 2009 lagged behind Goldman in the recovery from the financial crisis largely because Goldman's trading desks made out-sized profits while Morgan Stanley scaled back on risk.
Goldman continued its trading prowess in 2010 - but Morgan Stanley appeared to be cashing in as well. Morgan Stanley's first-quarter fixed income sales and trading revenues more than doubled to to $2.7 billion from $1.2 billion a year ago.
The firm has shaken up management in its trading divisions, hiring hundreds of traders and salespeople in the second half of 2009.
"We've clearly benefited from a strong environment," said Ruth Porat, Morgan Stanley's recently appointed chief financial officer. "We are executing on our strategy."
Morgan Stanley reported net income of $1.4 billion, or 99 cents per share, versus a loss of $578 million, or 57 cents per share, a year earlier. Net revenue was $9.1 billion.
Its shares were up 4 per cent to $31.68 in morning trading.
Investment banking results were weak in the first quarter as initial public offering and merger markets remained soft. Revenues were $1.1 billion, up from $873 million a year ago, but down from $1.7 billion in the fourth quarter of 2009.
Reuters