Updated from 7:50 a.m.
rose 2% Wednesday after the investment bank blew away second-quarter earnings targets, driven by a 65% jump in investment banking revenue.
The New York-based firm made $3.87 billion, or $2.45 a share, for the quarter ended May 31, up from the year-ago $2.86 billion, or $1.75 a share. Net revenue rose 32% from a year ago to $11.52 billion.
Analysts surveyed by Thomson Financial were looking for a profit of $2.01 a share on revenue of $10 billion.
Revenue rose 39% from a year ago in the institutional securities business to $7.4 billion, while equity sales and trading revenue advanced 33% to $2.2 billion. Fixed income revenue jumped 34% to $2.9 billion, and asset management recorded net customer inflows of $9.3 billion.
"Morgan Stanley delivered record revenues and earnings in the second quarter and the first half of the year, as we continued to build momentum across our securities businesses and continued to see the benefits of our diverse mix of products, clients and businesses around the globe," said CEO John Mack.
"Thanks to the commitment and focus of our people, we've now achieved seven straight quarters with
return on equity above 20%, and we're well on our way to reaching our goal of doubling 2005 earnings over five years. But we believe there is still work that remains to be done, and we remain intensely focused on delivering value to Morgan Stanley's clients and shareholders over the long term."
Fixed income revenue jumped despite lower securitized product revenue from residential mortgage securities. The company said commodities revenue also fell slightly from a year earlier, particularly in electricity and natural gas.
Discover, the firm's credit card issuing and payments network, was the one area that had less than impressive results. Morgan Stanley is set to officially spin off Discover at the end of the month.
Pretax income for the unit dropped 38% to $333 million. Card transaction volume rose just 5% from a year earlier to $29.9 billion.
But analysts for the most part said the results at Discover were in line with expectations.
Discover "doesn't have the most glamorous growth profile, but it's chugging along as it always has and should do fairly well as a standalone company," says Joe Dickerson, an analyst at Atlantic Equities in London.
Shares rose $1.53 to $89.33 on Wednesday.
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