Brokerage Lifts Morgan Stanley
Morgan Stanley's
(MWD)
first-quarter earnings surged 20% from a year ago, driven by the company's brokerage operations.
The Wall Street brokerage earned $1.47 billion, or $1.35 a share, in the quarter, compared with $1.23 billion, or $1.11 a share, last year. Overall net revenue was $6.85 billion in the most recent quarter, up from $6.24 billion a year ago.
Morgan's institutional securities unit saw pretax income fall 3% from a year ago to $1.15 billion, while pretax income in its individual investor unit rose 113% to $353 million. Income in the company's investment management unit rose 69% from a year ago to $287 million, while income in credit services rose 4% to $380 million.
The latest quarter included a number of special items, including a $260 million charge related to the bankruptcy of
Sunbeam Corp.
, a $109 million expense to correct accounting for real estate leases, a $41 million gain related to equity-based compensation and a $251 million insurance recovery related to Sept. 11, 2001.
Analysts had been forecasting earnings of $1.19 a share on net revenue of $6.44 billion.
Morgan Stanley's gross revenue picture, as depicted in its 8-K filing with the
SEC
, is somewhat less impressive than the other investment banks that have reported this week. On the top line, investment banking revenue fell 1% from a year ago to $821 million, while trading revenue rose 1% from a year ago to $1.85 billion. The company reported an 8% revenue gain in asset management to $1.18 billion. A significant contributor to top line growth was a 31% rise in "other" revenue to $174 million in the quarter.
Broken down according to categories in the bank's press release, Morgan said the fixed-income division of its institutional securities unit posted quarterly sales and trading revenue of $2 billion, up 21% from a year ago. The overall institutional securities unit saw revenue rise 14% from a year ago to $3.99 billion.
This is how the unit's revenue performance breaks down: investment banking revenue was roughly flat at $742 million; trading revenue rose 2% to $1.73 billion; commission and asset management revenue was unchanged; and "other" revenue rose 45% from a year ago to $109 million. Interest and dividend revenue minus interest expense doubled to $812 million in the quarter, indicating the company did well lending money to hedge funds.