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Morgan Stanley's $1.41 Billion Profit Tops Forecasts

Wednesday, 21 Apr 2010 08:59 AM

Morgan Stanley said Wednesday its first-quarter profit surged to $1.41 billion on strong results from its trading operations. The investment bank easily topped analysts' expectations.

Morgan Stanley said its earnings, which compare with a loss of $578 million a year ago, also came on a jump in its retail brokerage business. That's a sign that individual investors might be getting more comfortable with returning to the stock market.

The investment bank, which was criticized last year for being too conservative as markets recovered, said it had $4.1 billion in sales and trading revenue, almost triple the $1.4 billion of a year earlier. Other banks with big trading operations, including JPMorgan Chase & Co. and Goldman Sachs Group Inc., also had big trading profits to beat earnings' forecasts.

Banks have been profiting from continuing low interest rates that allow them to borrow money cheaply and put it into higher-yielding investments such as stocks.

Morgan Stanley's profit after payment of preferred stock dividends came to 99 cents per share on revenue of $9.08 billion. Earnings also got a boost from a special $382 million tax benefit. The benefit lifted earnings by 21 cents per share.

Analysts polled by Thomson Reuters forecast the bank would earn 57 cents per share on revenue of $7.94 billion. Analysts do not typically include special one-time gains in their estimates.

The company's stock rose $1.21, or 4 percent, to $31.66, in preopening trading.

Morgan Stanley said its investment banking business revenues rose to $887 million from $811 million during the first quarter last year. Investment banking includes raising money for stock and bond offerings.

Morgan Stanley's retail brokerage business, Morgan Stanley Smith Barney, helped generate $3.1 billion in revenue during the quarter. Net new assets jumped by $5.8 billion during the first quarter.

Morgan Stanley acquired a majority stake in Smith Barney from Citigroup in May.

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