Morgan Stanley 1Q Profit Up 69 Percent

Discussion in 'Wall St. News' started by universaltrader, Mar 21, 2007.

  1. yahoo
    By Joe Bel Bruno, AP Business Writer
    Morgan Stanley First-Quarter Profit Rises 69 Percent, Beats Wall Street Expectations

    NEW YORK (AP) -- Morgan Stanley Inc., the second-biggest investment bank on Wall Street, said Wednesday its fiscal first-quarter profit soared 69 percent on robust trading and strong advisory fees from stock and bond underwriting.

    Its shares rose nearly 3 percent in morning trading.

    Profit after paying preferred dividends rose to $2.66 billion, or $2.51 per share, in the three months ended Feb. 28 from $1.57 billion, or $1.48 per share, in the year-ago period. Excluding a gain on the sale of Quilter Holdings, the company posted profit from continuing operations of $2.56 billion, or $2.40 per share, in the latest period.

    Revenue rose 29 percent to $11 billion from $8.55 billion a year earlier.

    Results surpassed Wall Street projections for earnings of $1.88 per share on revenue of $9.42 billion, according to analysts polled by Thomson Financial.

    "This strong performance was in large part the result of effective, disciplined risk-taking by our team in institutional securities, which helped deliver record results across our sales and trading businesses," said Chairman and Chief Executive John Mack in a statement.

    The New York-based firm becomes the last of the four major Wall Street investment banks that report on a fiscal year basis to release earnings -- and all surpassed analysts' expectations. Merrill Lynch & Co., which reports on a calendar year basis, is expected to report earnings in late April.

    The investment banks that reported on an earlier schedule avoided the global market swoon on Feb. 27. The quarter also closed before mortgage brokers began to report troubles with their subprime portfolios, which also could impact investment banks' results.

    Mack is producing what he set out to do upon his return to Morgan Stanley in June 2005 amid management turmoil and dissatisfied shareholders. He has executed massive cost-cutting plans at the investment bank, announced the Discover card business would become a separate entity, and breathed new life into its flagship trading business.

    Backing the earnings growth was a 37 percent jump in revenue for its investment banking and trading division, a 31 percent advance in debt trading, and an 18 percent increase from its brokerage arm.

    The biggest push came from its institutional securities business, which includes investment banking, fixed income and equity sales and trading. Morgan Stanley reported record results of $7.6 billion for the unit.

    Within this unit, fixed-income sales and trading produced $3.6 billion of revenue. Morgan Stanley said it saw no disruption in this business from a meltdown among subprime mortgage lenders, which caters to borrowers with shaky credit.

    The investment house packages mortgage loans and sells them to investors as securities. It said fixed-income trading revenue was driven "by favorable positioning in the residential mortgage markets, robust performance in corporate credit trading, and strong customer flows." Morgan Stanley owns subprime lender Saxon Capital, which it acquired late last year.

    Equity sales and trading rose 36 percent to $2.2 billion as global stock markets continued to climb during the quarter.

    Investment banking revenue rose 25 percent to $1.23 billion from $982 million last year. The company said it ranked second in global completed merger and acquisition deals for the first two months of 2007, with a 34 percent market share.

    Global wealth management, the company's struggling brokerage unit, delivered an 18 percent rise in revenue to $1.5 million. Stronger management and administration fees caused revenue in its asset management business to jump 28 percent to $905 million.

    Discover, which Morgan Stanley said is on track to become a separate company during the third quarter, also delivered strong results on record transaction volume and the fifth-consecutive quarter of managed receivables growth. Revenue rose 6 percent to $1.02 billion.

    Shares rose $2.22, or 2.9 percent, to $78.33 in morning trading on the New York Stock Exchange. Its shares have traded in a 52-week range of $54.52 to $84.66.
  2. infooo


    hmm.. interesting