MORGAN Stanley has emerged from the shadow of a bad year, swinging to a first quarter profit of $1.8bn (£1.2bn) and more than doubling its bankers’ paycheques.
A resurgent fixed income department and improved trading revenues helped push the bank into the black after a loss of $17m this time last year. Earnings were 99 cents per share compared with a loss of 57 cents per share in 2009, flying past analysts’ expectations of 57 cents per share.
Investors were particularly encouraged by the pick-up in trading sales, which more than tripled from $1.4bn to $4.1bn. Lacklustre execution was a serious cause for concern to shareholders last year. Overall revenues boomed 200 per cent to $9.1bn.
Of the Wall Street players who have reported their three-month figures in 2010, Morgan Stanley handed out the highest compensation ratio to its staff. Nearly 50 per cent of revenues were distributed as employees shared a reward pool of $4.4bn. In 2009 they divided a relatively meagre $2bn.
Chief executive James Gorman, who joined in January, hailed the results but said there was still “a great deal of work to do”.
Chief financial officer Ruth Porat said 350 hires to the bank’s sales and trading force had helped bolster its numbers. She also took a swipe at Goldman Sachs’ predicament, pointing out the bank had not been served a Wells notice on its derivatives unit.
Mark Lane, an analyst with William Hill, said: “Last year was a painful transition, so expectations were lower. But the results are good.”
Shares in Morgan Stanley closed four per cent up at $31.68.