A SURGE in trading activity, particularly in bonds, lifted Morgan Stanley’s profits during the first quarter of this year, the bank revealed yesterday.
Unlike most of its rivals, Morgan Stanley outdid its first quarter last year, with its profits rising from $1.1bn to $1.4bn, once the effect of an accounting loss was stripped out.
The cost of rewarding its staff crept up due to $138m in redundancy pay-offs as the bank cut its payroll. Staff costs were $4.4bn for the quarter versus $4.4bn during the same period last year.
Chief executive James Gorman said: “Of particular note was the strength in sales and trading, which showed broad-based gains across products and regions.” In particular, the bank gained market share in bond trading, with revenues for the division rising by more than a third to $2.6bn. Chief financial officer Ruth Porat called the gains “the fruits of all we’ve done here” to hire staff in fixed income.
Like Goldman, the bank also reduced its risk appetite: its value-at-risk measure – how much it could lose in one day – has dropped from $123m last quarter to $84m in 2012.